FTC Decision in Baxter/Immuno Acquisition To Preserve Competition in two Markets for Plasma Products

The Federal Trade Commission announced today that it had resolved antitrust concerns raised by the proposed $463 million acquisition of Immuno International AG (“Immuno”) by Baxter International Inc. (“Baxter”). Both Baxter and Immuno manufacture a wide variety of biologic products derived from human blood plasma, including products for the treatment of hemophilia and products used in a wide variety of surgical applications. According to the FTC, the acquisition would create the largest manufacturer of plasma products in the world. The Commission has accepted, subject to final approval, an agreement which remedies the anticompetitive effects of the proposed merger. The settlement would require Baxter to divest assets and undertake certain actions to restore the competition lost by the merger. As a result of the FTC’s agreement, competition in the research, development, manufacture and sale of plasma products will continue.

The merger raised antitrust concerns in two areas: 1) the research , development, manufacture and sale of products for the treatment of Factor VIII inhibitors in hemophiliacs; and 2) the research, development, manufacture and sale of fibrin sealant, a product in development that will be used to control bleeding in surgical procedures. Baxter and Immuno are the only two companies marketing products in the United States to treat hemophiliacs with Factor VIII inhibitors. Baxter and Immuno are also two of only a few companies seeking Food and Drug Administration approval to market fibrin sealants in the United States. In both of these markets, broad patents govern the manufacture of these products and could prevent the entry of competing products.

Baxter, a publicly traded corporation headquartered in Deerfield, Illinois, is engaged in the research, development, manufacture and sale of pharmaceutical products, including biologic products derived from human blood plasma. Immuno is incorporated under the laws of Switzerland and headquartered in Zollikon, Switzerland. Immuno researches, develops, manufactures and sells biologic products, including products derived from human blood plasma and vaccines. Immuno operates in the United States through its wholly-owned subsidiary Immuno-U.S., Inc., located in Rochester, Michigan.

Factor VIII Inhibitor Treatments

A significant number of hemophiliacs develop an immune response or “inhibitors” to the primary treatment for hemophilia. Baxter and Immuno both manufacture products that overcome the patient’s inhibitor response, making effective treatment possible. In the United States, Immuno’s FEIBA and Baxter’s Autoplex are the only two products available for the long-term treatment of patients who develop Factor VIII inhibitors. As a result, according to the FTC’s complaint, the proposed acquisition would tend to create a monopoly, giving Baxter the ability to unilaterally raise prices.

Fibrin Sealants

Fibrin sealants are biologic products used to stop bleeding in surgical procedures or traumatic injury, and also are used to promote wound healing. In Europe and Japan, fibrin sealants are used in a wide variety of surgical procedures, and to treat burn and trauma victims.

Currently there are no fibrin sealant products marketed in the United States. According to the FTC’s complaint, the acquisition of Immuno by Baxter would combine two of only a few companies developing fibrin sealant for sale in the United States. The United States market for FDA-approved fibrin sealants could be as large as $400 million per year, the Commission said. The acquisition would eliminate the significant on-going competition between Baxter and Immuno in the research and development, as well as future competition in the manufacture and sale, of fibrin sealant in the United States. In addition to the loss of competition in research and development, the acquisition of Immuno by Baxter could result in higher prices for this product, the FTC alleged.

The FTC complaint also alleges that new entry by other firms in each of the markets at issue is difficult and time consuming, and would require the expenditure of significant resources over a period of many years with no assurance that viable products would result.

The proposed consent order would remedy the alleged antitrust violations. In the market for the research, development, manufacture and sale of treatments for Factor VIII inhibitors in the United States, the proposed order would require Baxter to divest its Autoplex product to a Commission approved buyer within four months of the date Baxter signed the consent and, as a result, maintain competition in this market. With regard to fibrin sealant, the proposed consent order would require Baxter to license Immuno’s product in development to a Commission- approved licensee within four months of the date Baxter signed the consent to remedy this potential loss of competition.

The Commission vote to announce this proposed consent agreement for a 60-day public comment period was 4-0, with Commissioner Roscoe B. Starek, III, recused. A summary of the agreement will be published in the Federal Register shortly. Comments should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the complaint, proposed consent agreement, and an analysis of the agreement to assist the public in commenting are available on the FTC’s web site at http://www.ftc.gov and also from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 202-326-2502. Consent agreements subject to public comments also are available by calling 202-326-2637. To find out the latest FTC news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

George S. Cary
202-326-3741

Ann Malester
202-326-2682

 

(FTC File No. 971-0002)