[Federal Register Volume 80, Number 25 (Friday, February 6, 2015)]
[Notices]
[Pages 6718-6720]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-02461]


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FEDERAL TRADE COMMISSION

[File No. 141 0134]


Sun Pharmaceutical Industries Ltd., Ranbaxy Laboratories Ltd., 
and Daiichi Sankyo Co., Ltd.; Analysis of Proposed Consent Orders To 
Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair methods of competition. 
The attached Analysis to Aid Public Comment describes both the 
allegations in the draft complaint and the terms of the consent 
orders--embodied in the consent agreement--that would settle these 
allegations.

DATES: Comments must be received on or before March 3, 2015.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/sunpharmaceuticalconsent/ online or on 
paper, by following the instructions in the Request for Comment part of 
the SUPPLEMENTARY INFORMATION section below. Write ``Sun Pharmaceutical 
Industries Ltd.--Consent Agreement; File No. 141-0134'' on your comment 
and file your comment online at https://ftcpublic.commentworks.com/ftc/sunpharmaceuticalconsent/ by following the instructions on the web-
based form. If you prefer to file your comment on paper, write ``Sun 
Pharmaceutical Industries Ltd.--Consent Agreement; File No. 141-0134'' 
on your comment and on the envelope, and mail your comment to the 
following address: Federal Trade Commission, Office of the Secretary, 
600 Pennsylvania Avenue NW., Suite CC-5610 (Annex D), Washington, DC 
20580, or deliver your comment to the following address: Federal Trade 
Commission, Office of the Secretary, Constitution Center, 400 7th 
Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Aylin M. Skroejer, Bureau of 
Competition, (202-326-2459), 600 Pennsylvania Avenue NW., Washington, 
DC 20580.

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SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned consent agreement 
containing consent orders to cease and desist, having been filed with 
and accepted, subject to final approval, by the Commission, has been 
placed on the public record for a period of thirty (30) days. The 
following Analysis to Aid Public Comment describes the terms of the 
consent agreement, and the allegations in the complaint. An electronic 
copy of the full text of the consent agreement package can be obtained 
from the FTC Home Page (for January 30, 2015), on the World Wide Web, 
at http://www.ftc.gov/os/actions.shtm.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before March 3, 2015. 
Write ``Sun Pharmaceutical Industries Ltd.--Consent Agreement; File No. 
141-0134'' on your comment. Your comment--including your name and your 
state--will be placed on the public record of this proceeding, 
including, to the extent practicable, on the public Commission Web 
site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of 
discretion, the Commission tries to remove individuals' home contact 
information from comments before placing them on the Commission Web 
site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone's Social Security number, 
date of birth, driver's license number or other state identification 
number or foreign country equivalent, passport number, financial 
account number, or credit or debit card number. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which . . . is privileged or confidential,'' as discussed in Section 
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 
4.10(a)(2). In particular, do not include competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you have to follow the procedure explained 
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept 
confidential only if the FTC General Counsel, in his or her sole 
discretion, grants your request in accordance with the law and the 
public interest.
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    \1\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
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    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/sunpharmaceuticalconsent/ by following the instructions on the web-
based form. If this Notice appears at http://www.regulations.gov/#!home, you also may file a comment through that Web site.
    If you file your comment on paper, write ``Sun Pharmaceutical 
Industries Ltd.--Consent Agreement; File No. 141-0134'' on your comment 
and on the envelope, and mail your comment to the following address: 
Federal Trade Commission, Office of the Secretary, 600 Pennsylvania 
Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580, or deliver 
your comment to the following address: Federal Trade Commission, Office 
of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, 
Suite 5610 (Annex D), Washington, DC 20024. If possible, submit your 
paper comment to the Commission by courier or overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before March 3, 2015. You can find more information, 
including routine uses permitted by the Privacy Act, in the 
Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

Analysis of Agreement Containing Consent Orders To Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Orders (``Consent 
Agreement'') from Sun Pharmaceutical Industries Ltd. (``Sun'') that is 
designed to remedy the anticompetitive effects resulting from Sun's 
acquisition of Ranbaxy Laboratories Ltd. (``Ranbaxy'') from Daiichi 
Sankyo Co., Ltd. (``Daiichi Sankyo''). Under the terms of the proposed 
Consent Agreement, the parties are required to divest all of Ranbaxy's 
rights and assets to generic minocycline hydrochloride 50 mg, 75 mg, 
and 100 mg tablets (``minocycline tablets'') to Torrent Pharmaceuticals 
Ltd. (``Torrent'').
    The proposed Consent Agreement has been placed on the public record 
for thirty days for receipt of comments from interested persons. 
Comments received during this period will become part of the public 
record. After thirty days, the Commission will again evaluate the 
proposed Consent Agreement, along with the comments received, to make a 
final decision as to whether it should withdraw from the proposed 
Consent Agreement or make final the Decision and Order (``Order'').
    Pursuant to an agreement dated April 6, 2014, Sun plans to acquire 
Ranbaxy in an all-stock deal valued at approximately $4 billion (the 
``Proposed Acquisition''). The Commission alleges in its Complaint that 
the Proposed Acquisition, if consummated, would violate Section 7 of 
the Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the Federal 
Trade Commission Act, as amended, 15 U.S.C. 45, by lessening future 
competition in the markets for each dosage strength of generic 
minocycline tablets in the United States. The proposed Consent 
Agreement will remedy the alleged violations by preserving the 
competition that would otherwise be eliminated by the Proposed 
Acquisition.

I. The Product and Structure of the Markets

    The Proposed Acquisition would reduce the number of future 
suppliers in the markets for generic minocycline tablets, which 
physicians prescribe to treat bacterial infections including pneumonia 
and other respiratory tract infections, acne, and other skin, genital, 
and urinary tract infections. Pharmaceutical companies usually launch 
generic versions of drugs after a branded product loses its patent 
protection. When only one generic product is available, the price for 
the branded product acts as a ceiling above which the generic 
manufacturer cannot price its product. During this period, the branded 
product competes directly with the generic. Once multiple generic 
suppliers enter a market, the branded drug manufacturer usually ceases 
to provide any competitive constraint on the prices for generic 
versions of the

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drug. Rather, generic suppliers compete only against each other. In 
generic pharmaceutical product markets, price generally decreases as 
the number of generic competitors increases. The United States is the 
relevant geographic market for generic drugs because the U.S. Food and 
Drug Administration (``FDA'') must approve them for sale within the 
United States.
    There are currently only three suppliers of each dosage strength of 
generic minocycline tablets in the United States: Ranbaxy, Dr. Reddy's 
Laboratories Ltd., and Par Pharmaceutical Companies, Inc. Sun is one of 
only a limited number of firms likely to enter the generic minocycline 
tablets markets in the near future. Sun's acquisition of Ranbaxy would 
therefore deprive consumers of the increased competition and likely 
price reductions that would have occurred as a result of Sun's 
independent entry.

II. Entry

    Entry into the markets for generic minocycline tablets would not be 
timely, likely, or sufficient in magnitude, character, and scope to 
deter or counteract the anticompetitive effects of the Proposed 
Acquisition. The combination of drug development times and regulatory 
requirements, including approval by the FDA, is costly and lengthy.

III. Effects

    The Proposed Acquisition likely would cause significant 
anticompetitive harm to consumers by eliminating future competition 
that would otherwise have occurred when Sun's generic minocycline 
tablets entered the markets. Market participants characterize generic 
minocycline tablets as commodities, and each market as one in which the 
number of generic suppliers has a direct impact on pricing. Customers 
and competitors have confirmed that the price of generic pharmaceutical 
products decreases with new entry even after several other suppliers 
have entered the market. Further, customers generally believe that 
having at least four suppliers in each generic pharmaceutical market 
produces more competitive prices than if fewer suppliers are available 
to them.
    The Proposed Acquisition would eliminate significant future 
competition between Sun and Ranbaxy. The evidence shows that 
anticompetitive effects are likely to result from the Proposed 
Acquisition due to the elimination of an additional independent 
competitor in the markets for generic minocycline tablets, which would 
have allowed customers to negotiate lower prices. Thus, absent a 
remedy, the Proposed Acquisition will likely cause U.S. consumers to 
pay significantly higher prices for generic minocycline tablets.

IV. The Consent Agreement

    The proposed Consent Agreement effectively remedies the Proposed 
Acquisition's anticompetitive effects in the relevant markets. Pursuant 
to the Consent Agreement and the Order, the parties are required to 
divest all of Ranbaxy's rights and assets to generic minocycline 
tablets to Torrent. The parties must accomplish these divestitures and 
relinquish their rights no later than ten days after the Proposed 
Acquisition is consummated.
    The Commission's goal in evaluating possible purchasers of divested 
assets is to maintain the competitive environment that existed prior to 
the Proposed Acquisition. If the Commission determines that Torrent is 
not an acceptable acquirer, or that the manner of the divestitures is 
not acceptable, the proposed Order requires the parties to unwind the 
sale of rights to Torrent and then divest the products to a Commission-
approved acquirer within six months of the date the Order becomes 
final. The proposed Order further allows the Commission to appoint a 
trustee in the event the parties fail to divest the products as 
required.
    The proposed Consent Agreement and Order contain several provisions 
to help ensure that the divestitures are successful. The Order requires 
that Ranbaxy transfer to Torrent all confidential business information 
and requires that Sun and Ranbaxy take all actions that are necessary 
to maintain the full viability and marketing of the generic minocycline 
tablets until Torrent commences the distribution, marketing, and sale 
of the products.
    The proposed Order also requires the parties to divest Ranbaxy's 
generic minocycline hydrochloride 50 mg, 75 mg, and 100 mg capsules 
(``minocycline capsules'') to Torrent to ensure that Torrent achieves 
regulatory approval to qualify a new API supplier for its minocycline 
tablets as quickly as Ranbaxy would have. Torrent will be able to 
establish the current API supplier of the minocycline capsules as the 
API supplier for its minocycline tablets through a less time-intensive 
regulatory process if Torrent controls both products and uses the same 
API supplier for both. Moreover, the proposed Order requires Sun and 
Ranbaxy to manufacture and supply generic minocycline tablets and 
capsules to Torrent following the divestiture to allow Torrent to enter 
the markets while it validates its manufacturing process and seeks the 
necessary FDA approvals.
    The Commission will appoint Frank Civille to act as an interim 
monitor to assure that Sun and Ranbaxy expeditiously comply with all of 
their obligations and perform all of their responsibilities pursuant to 
the Consent Agreement. In order to ensure that the Commission remains 
informed about the status of the transfer of rights and assets, the 
Consent Agreement requires Sun and Ranbaxy to file reports with the 
interim monitor who will report in writing to the Commission concerning 
performance by the parties of their obligations under the Consent 
Agreement.
    The purpose of this analysis is to facilitate public comment on the 
proposed Consent Agreement, and it is not intended to constitute an 
official interpretation of the proposed Order or to modify its terms in 
any way.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2015-02461 Filed 2-5-15; 8:45 am]
BILLING CODE 6750-01-P