On October 10, 2019, the Commission published its decision of July 29, 2019, to unconditionally approve Bristol-Myers Squibb Company’s (“BMS”) acquisition of Celgene Corporation (“Celgene”) following a Phase I review.[1] BMS and Celgene are global pharmaceutical companies.

The two companies’ products primarily overlapped in respect of Celgene’s already marketed Otezla, and BMS’ pipeline treatments, one in Phase 3 and one in Phase 1 of clinical trials, for moderate to severe psoriasis and psoriasis arthritis.[2]

The Commission reaffirmed its increasingly forward-looking framework for the assessment of transactions in R&D-intensive industries, such as pharmaceuticals.[3] The Commission closely scrutinized the parties’ new pipeline products that may ultimately replace existing treatments or create an entirely new demand, analyzing the potential competition between the parties’ existing and pipeline products.

The Commission found that the combined entity would most likely have no incentive to cease, repurpose, or delay the development of BMS’ pipeline treatments because, among other things, the parties’ drugs are different in terms of mode of action, line of treatment, efficacy, and safety profiles. In Europe, Otezla is used and reimbursed as a third-line treatment for patients who have failed a conventional therapy, whereas BMS’ pipeline drug is intended to be used as a first-line treatment.

Interestingly, in the U.S., Celgene’s Otezla is used as a first-line treatment and holds a strong market position. This led the parties to divest Otezla in order to address the FTC’s competition concerns.[4] The Commission’s unconditional Phase I approval comes after two recent cases where the Commission conditioned its clearance upon the merging parties divesting the pipeline drug.[5]

[1]      BMS/Celgene (Case COMP/M.9294), Commission decision of July 29, 2019.

[2]      Psoriasis is an autoimmune disease characterized by patches of abnormal skin. Other horizontal overlaps between the two companies’ products concerned other autoimmune diseases (inflammatory bowel diseases, including ulcerative colitis and Crohn’s disease, and systemic lupus erythematosus), fibrotic diseases, and oncology.

[3]      The Commission specifically referred to its analysis in prior cases Bayer/Monsanto (Case COMP/M.8084), Commission decision of March 21, 2018; Novartis/GSK Oncology (Case COMP/M.7275), Commission decision of January 28, 2018; and Dow/Dupont (Case COMP/M.7932), Commission decision of March 27, 2017.

[4]      On June 24, 2019, BMS announced its plan to divest Celgene’s psoriasis treatment (Otezla). On August 26, 2019, BMS announced the divestment of Celgene’s Otezla to Amgen for $13.4 billion.

[5]      See Takeda’s acquisition of Shire (Takeda/Shire (Case COMP/M.8955), Commission decision of November 20, 2018); and Pfizer’s acquisition of Hospira (Pfizer/ Hospira (Case COMP/M.7559), Commission decision of June 15, 2015).