US regulators are suing to block Amgen’s $28.3 billion deal for Horizon
The US Federal Trade Commission has sued to block Amgen’s $28.3 billion deal to buy Horizon Therapeutics.
The lawsuit marks the first time in more than a decade that the US antitrust regulator has tried to block a deal in the pharmaceutical sector.
Shares in Horizon, which is based in Ireland, were down almost 16 percent on Tuesday morning.
The news also appeared to hit Seagen, which fell more than 5 percent as investors weighed the possibility of the FTC targeting other deals in the sector. The oncology-focused biotech agreed to a $43 billion deal to be acquired by Pfizer, which on Tuesday launched a jumbo eight-tranche bond deal to finance the acquisition.
FTC Chairman Lina Khan is among a new group of progressive antitrust officials appointed by US President Joe Biden, who have vowed to take a tougher stance and crack down on anti-competitive behavior in the US.
When Amgen announced the transaction last year, it said Horizon̵[ads1]7;s pipeline of drugs would “strongly complement” its R&D portfolio. The pipeline includes drugs targeting rare inflammatory and autoimmune diseases, as well as Horizon’s blockbuster treatment for thyroid eye disease, Tepezza.
“We understand that the FTC and current administration are prepared to continue their more aggressive strategy to deter mergers and acquisitions even if the legal merits are not strong since Amgen has no overlapping or anticompetitive dynamics with Horizon,” said Michael Yee, analyst at Jefferies.
The FTC under Khan and the Justice Department’s antitrust unit under Jonathan Kanter have aggressively challenged agreements they consider anticompetitive.
One of the biggest tests for Khan will be the FTC’s bid to block Microsoft’s $75 billion acquisition of gaming company Activision Blizzard. The deal was approved by the EU this week, although the UK has decided to block the transaction.
The antitrust watchdog under Khan has also increased its scrutiny of the pharmaceutical industry beyond corporate ties. The agency started an investigation in June last year into intermediaries in the prescription drug industry. It required the six largest pharmacy operators, which negotiate fees and rebates with drugmakers, to share information about their business practices.
Less than 10 days later, the FTC said it would step up enforcement of illegal rebate schemes or kickbacks to prescription drug distributors that block consumers’ access to low-cost drugs.
In announcing the FTC’s tougher enforcement stance, Khan warned that this “should put the entire prescription drug industry on notice: when we see illegal discounting practices that foreclose competition and raise the cost of prescription drugs for families, we will not hesitate to bring our full powers to bear “.
Additional reporting by Peter Wells in New York