Mergers: Commission approves AbbVie's acquisition of Allergan, subject to conditions
The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of Allergan by AbbVie. The approval is conditional on the divestment of a product under development by Allergan to treat inflammatory bowel diseases.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: "Inflammatory bowel diseases are lifelong conditions with devastating effects on the life of millions of people. Our decision makes sure that the merger between AbbVie and Allergan will not disrupt the development of a promising innovative treatment for these diseases. This will increase the choice of treatments and offer better prices for patients.”
The Commission's investigation
The Commission's investigation primarily focused on biologic treatments for ulcerative colitis and Crohn's disease, collectively termed inflammatory bowel diseases (“IBD”), where the activities of AbbVie and Allergan overlap.
IBD are lifelong autoimmune diseases that involve inflammation of the digestive tract and for which there is no cure. Biologic drugs are typically prescribed after the failure of conventional therapies, such as corticosteroids and immunosuppressants.
AbbVie's product portfolio includes several biologic drugs for IBD, notably (i) risankizumab, a pipeline drug that belongs to a class of biologics called “IL-23 inhibitors”, and (ii) Humira, a marketed drug that belongs to another class of biologics called “anti-TNFs”.
Allergan is also currently developing an IL-23 inhibitor, called brazikumab.
The Commission found that brazikumab is likely to compete closely with AbbVie's risankizumab as it belongs to the same class of drugs.
The Commission's market investigation largely confirmed that the transaction, as initially notified, would have led to a loss of innovation for IBD treatments, asAbbVie would not continue developing Allergan's IL-23 inhibitor. The IL-23 inhibitors are a promising class of biologics for which only two other competing pipeline products, in addition to AbbVie's and Allergan's IL-23 inhibitors, are currently being developed.
The transaction would have thus prevented a promising drug from reaching the market, leading to potentially less choice and higher prices for patients and health systems.
The proposed remedies
To address the Commission's competition concerns, AbbVie offered to divest brazikumab, Allergan's IL-23 inhibitor pipeline product, including the development, manufacturing and marketing rights at worldwide level, to a purchaser that will continue the drug's development.
These commitments thus address the Commission's competition concerns as they fullyremove the overlap between AbbVie's and Allergan's IL-23 inhibitor pipeline drugs.
Therefore, the Commission concluded that the proposed transaction, as modified by the commitments, would no longer raise competition concerns. The decision is conditional upon full compliance with the commitments.
Companies and products
AbbVie, headquartered in the US, is a global pharmaceutical company active in six main therapeutic areas: immunology (including autoimmune diseases), oncology, virology, neuroscience/central nervous system disorders, metabolic diseases and pain associated with endometriosis.
Allergan, headquartered in Ireland, is a global pharmaceutical company active in four main therapeutic areas: medical aesthetics, eye care, neuroscience/central nervous system disorders and gastroenterology.
Merger control rules and procedures
The transaction was notified to the Commission on 12 November 2019.
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II). This deadline is extended to 35 working days in cases where remedies are submitted by the parties, such as in this case.