Pfizer Inc. received a green light from European Union regulators Tuesday for its $16 billion acquisition of smaller rival Hospira Inc. after agreeing to make divestments designed to guard against price rises and protect the research and development of drugs.
The deal, announced in February, will transform New York-based Pfizer into a leading player in the emerging market for lower-priced versions of costly biotech drugs.
EU regulators had worried that the two companies, both based in the U.S., would together have a high market share for certain sterile injectable drugs, which are administered with a hollow hypodermic needle.
Regulators were also concerned that the companies might delay or discontinue production of a copycat version of Infliximab, a popular drug used to treat autoimmune diseases such as rheumatoid arthritis and Crohn’s disease.
To assuage those concerns, Pfizer agreed to fully divest the development, manufacturing and marketing rights of its Infliximab biosimilar drug currently in development, though it will retain marketing rights outside Europe. It also agreed to divest certain sterile injectable drugs that raised competition concerns in individual EU countries.
“This is not just about keeping prices low for patients and health care services,” the EU’s antitrust chief Margrethe Vestager said in a statement. “We have also made sure that the merger of Pfizer/Hospira doesn't stand in the way of the research and development of medication that could have huge benefits for society.”
Biotech drugs with more than $100 billion in sales are expected to lose patent protection in the next five or 10 years, according to Pfizer. Industry officials expect there will be strong demand for lower-price versions of the drugs amid global pressures over costs.