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The ACCC is investigating whether the proposed merger of Arrow and Apotex – two of the largest suppliers of generics in Australia – will impact on competition

In early May, Arrow and Apotex announced a proposed merger of their Australian and New Zealand generic pharmaceutical and OTC operations.

The Australian Competition and Consumer Commission (ACCC) is now inviting submissions from interested parties as part of a public review of the proposed merger.

This merger is anticipated for completion in the new financial year pending results of the review and due diligence.

Arrow is an importer and distributor of prescription and OTC pharmaceuticals ultimately owned by Indian company Strides.

The end result of the proposed merger will be a new consolidated group of companies which is majority owned by the Strides group, with the Apotex group owning the remaining shares.

The ACCC’s investigation is focused on the impact on competition, as Arrow and Apotex are both importers and distributors of prescription and over the counter (OTC) pharmaceuticals in Australia.

“Arrow and Apotex are two of the largest suppliers of generic pharmaceuticals in Australia,” it says.

“Together with their related companies, they overlap in the supply of approximately 170 individual prescription pharmaceutical products and OTC pharmaceutical products by molecule or active ingredient.

“In particular, we are seeking your views on:

  • how closely Arrow and Apotex compete with each other in supplying prescription and OTC pharmaceuticals
  • whether the price of prescription and OTC pharmaceuticals would be likely to increase as a result of the proposed merger
  • whether Arrow’s and Apotex’s customers would have sufficient alternative sources of prescription and OTC pharmaceuticals (actual and/or potential) after the proposed merger, and
  • how easy it would be for existing competitors to expand and/or new competitors to enter the market.”

“The legal test which the ACCC applies in considering the proposed merger is in section 50 of the Competition and Consumer Act 2010,” says the ACCC.

“Section 50 prohibits mergers that are likely to have the effect of substantially lessening competition in a market.”

In addition to importing and distributing prescription and OTC pharmaceuticals, Arrow also supplies a small number of branded originator drugs under licence and branded OTC pharmaceuticals.

The company owns the Chemists Own generic brand, as well as a 51% share in Pharmacy Alliance, an independent pharmacy network membership of around 650 member pharmacies.

Arrow also holds a 50% share in Oraderm Pharmaceuticals, a pharmaceutical company with a portfolio of two prescription medicines (Acitretin and Isotretinoin) which it supplies in Australia.

Apotex is an importer and distributor of prescription and OTC pharmaceuticals to hospitals and pharmacies. It also supplies branded originator drugs under licence, vaccine products, and vitamin and mineral products. Apotex is wholly owned by Apotex International Inc.

See more information on the review and submissions here. Submissions close 5pm on 20 July 2018.

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