FTC Puts Conditions On Actavis Deal To Buy Forest Laboratories

(RTTNews) - The Federal Trade Commission or FTC said Monday that it has put conditions on specialty pharmaceutical company Actavis plc's (ACT) acquisition of rival Forest Laboratories Inc. (FRX). The FTC noted that the $25 billion deal, as originally proposed, would violate federal antitrust laws by reducing competition in the markets for three current generic products.

Actavis, the world's second-largest generic drug maker, is currently in the process of acquiring Forest Laboratories for about $25 billion in cash and stock. The company expects the acquisition to close at mid-year.

Under the FTC's proposed settlement, Actavis and Forest Laboratories have agreed to sell or relinquish their rights to four generic pharmaceuticals to settle charges that that their deal likely would be anticompetitive. The four generic pharmaceuticals treat hypertension, angina, cirrhosis, and prevent seizures.

The FTC's complaint has alleged that Actavis' acquisition of Forest would violate federal antitrust laws by reducing competition in the generic diltiazem hydrochloride extended release capsules used to treat hypertension and chronic stable angina; generic ursodiol tablets used to treat primary biliary cirrhosis of the liver; and generic propranolol hydrochloride extended release capsules used to treat hypertension.

Further, the FTC's complaint alleges that the proposed transaction would delay the introduction of generic competition against Lamictal ODT, the branded lamotrigine orally disintegrating tablets used to prevent seizures, manufactured by Forest and marketed by GlaxoSmithKline plc (GSK). Actavis is the only company to have received FDA approval for a generic version of Forest/GSK's Lamictal ODT.

Under FTC's proposed settlement order, Actavis and Forest have agreed to relinquish their rights to market generic diltiazem hydrochloride to Valeant Pharmaceuticals International, Inc. (VRX, VRX.TO); sell generic ursodiol and generic lamotrigine ODT to Impax Laboratories, Inc. (IPXL); and sell generic propranolol hydrochloride to Catalent Pharma Solutions, Inc.

Under the terms of the proposed settlement, Actavis and Forest must ensure the viability, marketability, and competitiveness of the drugs that are being divested until they are sold. To ensure that Actavis and Forest will comply with the terms of the proposed order, the FTC has appointed an interim monitor until the divestitures have been completed successfully.

ACT closed Monday's trading at $223.05, down $0.22 or 0.10 percent on a volume of 6.38 million shares. FRX closed trading at $99.00, down $0.77 or 0.77 percent on a volume of 11.46 million shares.