EU Targets Sanofi, Other Drug Cos. In Antitrust Raids

By Leigh Kamping-Carder

Law360, New York (October 06, 2009) -- European Commission officials raided several major drug manufacturers on Tuesday, reportedly including Sanofi-Aventis SA, as part of an investigation into anti-competitive practices.

On suspicions that players in the pharmaceutical industry have been abusing their dominant market positions and engaging in restrictive business practices, the EC and national antitrust regulators conducted a series of unannounced inspections at an undisclosed number of companies, the commission said.

The EC did not release the identities of the companies, but Sanofi-Aventis, headquartered in Paris, told Reuters that it had been a target.

Representatives for the company could not be reached on Tuesday.

Three additional drug manufacturers have been investigated, according to an anonymous industry source quoted by Reuters.

“There's no indication that Wyeth was visited today or is being investigated,” a spokesman for the U.S. drugmaker, which has outposts across Europe, told Law360.

Pfizer Inc. is also unaware of raids at any of its European sites, according to a company spokeswoman, who added that the drugmaker was "confident all our actions are, and have always been, fully compliant with applicable competition and patent laws."

A spokesman for Abbott Laboratories said the company had not been contacted or visited by EU officials.

Germany's Bayer AG and Merck KgaA both said they were not searched, while GlaxoSmithKline PLC and AstraZeneca PLC were not aware of any inspections, Reuters reported.

Roche Holding AG said no officials had visited its offices, according to Dow Jones.

A number of other drug companies — including Novartis AG and Solvay SA — did not immediately respond to requests for comment on the raids.

Although the surprise probes are not an indication of wrongdoing, the inspections are the first step in an inquiry into anti-competitive practices, the EC said.

The news of the inspections comes a week after European Union Competition Commissioner Neelie Kroes told a committee in the European Parliament that pharmaceutical companies should “look out” for investigations in the coming months, following a recent rash of mergers in the industry.

Consolidation in the pharmaceutical markets has raised concerns for the continent's competition authorities, and a study released earlier in 2009 highlighted anti-competitive practices in the sector, Kroes said.

Since the beginning of 2009, several major drug company mergers have been announced. On Sept. 28 Abbott revealed a $6.6 billion deal for a unit of Belgian drugmaker Solvay, and Proctor & Gamble Co. sold its pharmaceuticals unit to Warner Chilcott PLC in August.

The $64 billion merger of Pfizer and Wyeth, the $44.3 billion merger of Roche and Genentech Inc., and the $43.2 billion acquisition of Schering-Plough Corp. by Merck & Co. highlighted activity in the sector in the first six months of 2009.

Kroes, who has two months left in her term, has been vowing strong oversight of drug company competition policies for the past several months.

In January 2008, European competition officials began a major study of competition in the pharmaceuticals sector with raids on some of the world's largest drugmakers including Pfizer, AstraZeneca, Johnson & Johnson, GlaxoSmithKline, Novartis, Sanofi-Aventis, Wyeth, Merck and Teva Pharmaceutical Industries Ltd.

In July, when the final report was released, the EC announced that it had opened formal investigations into Les Laboratoires Servier concerning allegations that the French cardiovascular-drug maker had engaged in restrictive business practices and had abused its dominant market position.

The commission further launched official probes into a slew of generics makers, including Lupin Ltd., Mylan Inc. subsidiary Matrix Laboratories Ltd., Unichem Laboratories Ltd. unit Niche Generics Ltd., Slovenia-based Krka dd, Teva and Teva UK Ltd.

Those investigations will focus on individual agreements between each generics maker and Servier, which the EC suspects might be restrictive and aimed at keeping a generic version of perindopril, a drug developed used to treat high blood pressure, off European markets, officials said.

--Additional reporting by Evan Weinberger, Melissa Lipman and Jesse Greenspan