Antitrust Lawyer Blog Commentary on Current Developments

FTC SETTLES WITH SUN PHARMACEUTICAL REGARDING ITS ACQUISITON OF TARO PHARMACEUTICAL

On August 13, 2008, the Federal Trade Commission (“FTC”) ordered Sun Pharmaceutical Industry Ltd (“Sun”) to sell all rights and assets of three distinct generic formulations of the anticonvulsant drug carbamazepine to Torrent Pharmaceutical Ltd, a generic drug company based in India, for its acquisition of Taro Pharmaceutical Industries Ltd. (“Taro”) to proceed.
Sun, based in Mumbai, India, and Taro, based in Israel, develop and manufacture generic drugs in the United States. Sun sells its products through its wholly owned subsidiary Caraco Pharmaceutical Laboratories Ltd.

The three drugs that are to be divested are: immediate-release carbamazepine tablets, chewable carbamazepine tablets and extended-release carbamazepine tablets. Each of these drugs are different forms of carbamazepine, an anticonvulsant used to prevent and control seizures.

The generic immediate-release carbamazepine tablets are generic versions of Tegretol, owned by Novartis. Taro owns 50% of the generic market for this drug, followed by Teva Pharmaceuticals (“Taro”), and Sun. Generic chewable carbamazepine tablets, which come in a more convenient form of dosage making them better suited for pediatric and geriatric patients, are prescribed in the same manner as immediate-release carbamazepine tablets. Teva owns 65% of the generic market for this drug, followed by Taro and Sun.Taro and Sun are the only companies waiting for approval from the U.S. Federal Drug Administration for the generic version of Novartis’s Tegretol-XR extended-release carbamazepine tablet.

The proposed transaction would reduce the number of firms competing in the U.S. market for generic immediate-release carbamazepine tablets (three to two) and generic chewable carbamazepine tablets (four to three) leaving Teva the only other significant competitor in each of those markets. Competition in the generic extended-release carbamazepine market would be eliminated, as Sun and Taro are the only companies expected to enter the market.

Robert Doyle
(202) 589-1834
rdoyle@dbmlawgroup.com