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From Antitrust Law Daily, July 20, 2017

Baxter, Claris to divest products to win FTC approval of acquisition

By Jeffrey May, J.D.

The FTC will allow Baxter International Inc. to proceed with its proposed $625 million acquisition of the injectable drugs business of India-based Claris Lifesciences Limited, subject to the divestiture of Claris’s rights to antifungal agent fluconazole in saline intravenous bags and milrinone in dextrose intravenous bags. The divestitures would settle FTC concerns that the proposed acquisition would harm competition in the U.S. markets for fluconazole in saline intravenous bags and milrinone in dextrose intravenous bags (In the Matter of Baxter International Inc., FTC File No. 171 0052).

Current, future competitive harm alleged. The proposed transaction was announced in December 2016. According to the FTC complaint, the transaction would have (1) reduced current competition in the United States for the fluconazole in saline intravenous bags, which is used to treat fungal and yeast infections; and (2) reduced imminent, future competition in the U.S. market for intravenous milrinone, a vasodilator that dilates the blood vessels, lowering blood pressure and allowing blood to flow more easily through the cardiovascular system. The FTC identified four "significant" competitors in the market for intravenous fluconazole bags in the United States, including Baxter and Claris. The FTC alleged that only three companies—Baxter, Hikma Pharmaceuticals PLC, and Pfizer Inc.—currently selling generic intravenous fluconazole bags in the United States. Claris is one of a limited number of suppliers capable of entering the market for milrinone in dextrose intravenous bags in the near future, according to the FTC.

Proposed consent order. Under the terms of a proposed FTC consent order, the parties will divest all of Claris’s rights to fluconazole in saline intravenous bags and milrinone in dextrose intravenous bags to New Jersey-based pharmaceutical company Renaissance Lakewood LLC. If Renaissance is found not to be an acceptable acquirer, or that the divestiture is not carried out in an acceptable way, the parties are required to unwind the sale of rights to Renaissance and divest the products to a Commission-approved acquirer within six months of the date the order becomes final. The Commission may also appoint a trustee in the event that the parties fail to divest the products as required, and may appoint an Interim Monitor to ensure the parties’ compliance with the Commission’s order, including the parties’ transfer of the relevant business information and provision of the specified transition services, according to the FTC announcement.

The order requires Baxter to supply Renaissance with fluconazole in saline intravenous bags and milrinone in dextrose intravenous bags for up to five years while transferring the manufacturing technology to Renaissance or its contract manufacturing designee. Baxter is also required to assist Renaissance in establishing its manufacturing capabilities and securing the necessary Food and Drug Administration approvals.

Attorneys: James R. Weiss, Jr. for FTC. Pamela L. Taylor (Jones Day) for Baxter International Inc. William J. Kolasky (Hughes Hubbard & Reed LLP) for Claris Lifesciences Ltd.

Companies: Baxter International Inc.; Claris Lifesciences Ltd.; Renaissance Lakewood LLC

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