Mylan, Pfizer's $12B Viatris merger clears FTC with deal for product selloffs

Federal Trade Commission
The Federal Trade Commission has cleared Mylan’s $12 billion acquisition of Pfizer’s Upjohn established medicines business. (Getty/pabradyphoto)

Fifteen months since the deal announcement, Mylan and Pfizer can finally move ahead with their generics merger after a COVID-related delay and a closer examination by U.S. antitrust regulators that has now ended with a settlement for product selloffs.

The Federal Trade Commission (FTC) has cleared Mylan’s acquisition of Pfizer’s Upjohn established medicines business, the agency said Friday. The ruling clears the final major regulatory hurdle before the combined business can officially start operating under the name Viatris, now expected on Nov.16, according to the two companies.

There’s a catch. The transaction can only move ahead on the condition of the pair divesting seven products that the FTC deemed to pose threats to current U.S. competition.

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Upjohn’s Caduet, a combination of ingredients in Norvasc and Lipitor used to treat high cholesterol and high blood pressure, is among six drugs that will be transferred to authorized generics firm Prasco. The other five are anti-seizure med phenytoin, hypertension therapy prazosin HCl, diuretic spironolactone HCTZ, antibiotic eye drop gatifloxacin and injectable uterine bleeding drug medroxyprogesterone acetate. In addition, Mylan’s own diuretic eplerenone will also have to go.

All those drugs will continue to be manufactured at their original sites to reduce the risk of interruption in supply. In some cases, this means Pfizer will serve as Prasco’s contract manufacturer unless the latter decides to pick another provider.

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The FTC also found three other drug markets where the combination of the two businesses would “delay or eliminate a likely entrant, reducing the likelihood that prices would decrease in the future.” These include the smoking cessation drug market, which features Pfizer’s popular product Chantix. But the agency didn’t force a sale in those areas.

The settlement, meanwhile, didn’t win over all five FTC commissioners. In a party-line vote, democratic Commissioners Rohit Chopra and Rebecca Kelly Slaughter voted against the Viatris deal, noting (PDF) that both Pfizer and Mylan have been targeted by states for generic price-fixing investigations. Rajiv Malik, the current Mylan president who will become the combined venture’s president, is also a defendant in one of the state lawsuits. Upjohn’s current chief, Michael Goettler, will be Viatris' new CEO.

Once again, Chopra and Slaughter criticized the FTC’s approach of seeking “narrow settlements” on specific products rather than blocking a deal for more general concerns when evaluating biophama M&A. The two previously made the same argument in voting “no” on Bristol Myers Squibb’s $74 billion Celgene buy, despite Celgene's agreement to sell blockbuster psoriasis drug Otezla to Amgen.

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Pfizer and Mylan unveiled their deal last July and drew the curtain on the Viatris name 12 months ago. The deal allows Pfizer a greater focus on the innovative drug franchise after its spinoff of its consumer health portfolio into a joint venture with GlaxoSmithKline. Mylan gains Upjohn’s global footprint, especially in China.

Mylan’s management has long been under investor pressure for a revamp. But as many firms distance themselves from the under-pressure generics industry, some industry watchers are wondering whether the company is quenching its thirst with poison.

Upjohn’s revenues have continuously been registering double-digit sales declines lately. In the first nine months, the business took a 30% sales hit to $5.94 billion, which Pfizer attributed to generic Lyrica competition in the U.S. as well as Lipitor and Novasc decreases in China thanks to the country's volume-based procurement program. But the numbers were “in line with our expectations and assumptions,” Pfizer chief financial officer, Frank D’Amelio, told investors during the company’s third-quarter earnings call last week.

The Viatris transaction nabbed EU antitrust clearance in May. And with the FTC nod, it has received all necessary regulatory approvals for the combination. Pfizer has set Nov. 13 as the date for the spinoff, and the deal is expected to close on Nov. 16.