The following is not meant to be legal advice.
There is a trend toward consolidation in the generic pharmaceutical industry. In October 2006, the Federal Trade Commission (FTC) completed its review of two generic pharmaceutical mergers: Watson's acquisition of Andrx, and Barr's acquisition of Pliva. In both acquisitions, the FTC obtained divestitures of generic products to remedy anticompetitive effects.
In the Watson acquisition, Watson announced its intention to acquire Andrx for $1.9 billion on March 13, 2006. The FTC's review of the transaction lasted over five months. In a consent order on October 31, 2006, the FTC required the divestiture of thirteen products to remedy alleged anticompetitive harm.
The FTC determined that "evidence shows that the price of a generic pharmaceutical product at issue decreases with the entry of each additional competitor." The number of generic suppliers has a direct and substantial effect on generic pricing, as each additional generic supplier can have a competitive impact on the market. Because there are multiple generic equivalents for each of the products at issue, the branded versions no longer significantly constrain the generics' pricing.
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