Sun clears US regulatory hurdle for Taro

Sells 3 drugs to Torrent to overcome FTC’s misgivings on monopoly play in the United States.

The US Federal Trade Commission (FTC) has given the green light to Sun Pharmaceutical Industries to acquire Israel-based Taro Pharmaceuticals after the Mumbai-based company sold three drugs to Torrent Pharmaceutical at the US regulator’s behest. Earlier, FTC had opposed the transaction to avoid a monopoly situation in the US market.

FTC had said that Sun’s acquisition of Taro would cause US consumers to pay higher prices for three generic formulations of seizure and epileptic drug carbamazepine. Sun’s US subsidiary, Caraco Pharmaceutical Laboratories currently markets its two versions – an immediate-release carbamazepine tablet and another chewable version – in the US.

 

The regulator has also approved the launch of an extended-release version of the same drug in the US market.

Taro controls half of the generic market for Novartis’ branded drug Tegretol in the US, followed by Teva Pharmaceuticals and Caraco.

“We have entered into a binding agreement with Torrent to sell the three carbamazepine versions in relation with the completion of our transaction with Taro,” said a Sun Pharma spokesperson. However, he declined to reveal the size of the deal with Torrent.

“The proposed acquisition would remove the direct competition between Sun and Taro for these key products and deny consumers the benefits of lower generic drug prices,” said Jeffrey Schmidt, director of the FTC’s Bureau of Competition, in a statement.

Meanwhile, Sun Pharma said that FTC has granted early termination of the anti-trust waiting period for the previously announced tender offer by its subsidiary Alkaloida Chemical Company Exclusive Group. The open offer, which opened on June 30, is scheduled to expire on September 2.

Last month, Sun launched an open offer at $7.75 per share to acquire all outstanding shares of Taro, including all of the founders’ shares, triggering an option agreement between Sun and Taro. Taro had backtracked from the $460-million merger deal with Sun Pharma, saying the takeover offer made a year ago had become stale and the company had turned around dramatically during the period.

Sun Pharma is the largest shareholder in Taro with 34.4 per cent stake. Sun’s shares closed nearly flat, posting a gain of 0.77 per cent at Rs 1,447.70 on the Bombay Stock Exchange on Thursday.