Generics merger gets the go-ahead

green light new law approval

The ACCC has announced that it will not oppose the merger of generics companies Arrow and Apotex

Once combined, the two companies would supply around half the market for generic prescription pharmaceuticals to pharmacies in Australia.

The announcement that Strides Pharma Science Ltd and Apotex Inc planned to merge Arrow Pharmaceuticals and Apotex Australia was made on May 18, 2018.

The ACCC says that after market inquiries and analysis of documents and data, the ACCC considers that the merger will not substantially reduce competition in any market.

“Any deal that combines two of the four largest competitors in a market will require close scrutiny,” says ACCC chair Rod Sims.

“However, we found that a combined Arrow-Apotex would continue to face strong competition from Mylan and Sandoz, and to a lesser extent from short range suppliers like Generic Health and Pharmacor. These suppliers are backed by strong international parent companies.

“The ability for pharmacies to pick and choose suppliers for individual generic pharmaceutical products also acts as a competitive constraint.

“A number of smaller generic players are active in the market in supplying pharmacies, and there is the potential for further competition via these smaller players building up a larger portfolio of generic products.

“We contacted many independent pharmacies, large banner groups and wholesalers. While some were concerned about the transaction, many were unconcerned or didn’t engage with us at all,” Mr Sims said.

Strides and Apotex have welcomed the ACCC’s decision.

Dennis Bastas, Executive Chairman of the new entity, said that as yet the new organisation is unnamed and that while details of its plans cannot be discussed due to current competition rules, it expects the merger will result in positive relationships with pharmacies.

“We sincerely value and respect the relationship that pharmacists and consumers have for the Arrow and Apotex products and services,” said Mr Bastas.

“The merger will provide our Australian customers with unparalleled service and support from the businesses with which they have chosen to partner for over 15 years.

“Once complete, our merged operation will continue to provide all of the Arrow and Apotex brands that our customers have come to know and trust, and further enhance our customer service and continuity of supply, to better help pharmacists grow their businesses,” Mr Bastas said.

The transaction remains subject to the conclusion of definitive agreements and the satisfaction of certain other conditions, including approval from the Foreign Investment Review Board. The merger is expected to be finalised by the end of the year.

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