CELEX: 31996M0821
Language: en
Date: 1996-10-09 00:00:00
Title: COMMISSION DECISION of 09/10/1996 declaring a concentration to be compatible with the common market (Case No IV/M.821 - Baxter / Immuno) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

Avis juridique important

|

31996M0821

COMMISSION DECISION of 09/10/1996 declaring a concentration to be compatible with the common market (Case No IV/M.821 - Baxter / Immuno) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 386 , 20/12/1996 P. 0011

  COMMISSION DECISION of 09/10/1996 declaring a concentration to be compatible with the common market  (Case No IV/M.821 - Baxter / Immuno) according to Council Regulation (EEC) No 4064/89   (Only the English text is authentic)  The paper version of the decision is available through the sales offices of the Office of Official Publications of the  European Communities.  PUBLIC VERSION  MERGER PROCEDURE  ARTICLE 6(1)(b) DECISION  To the notifying parties   Dear Sirs,  Subject:  Case N* IV/M. 821 - Baxter / Immuno  <ind> <ind> Notification of 09.09.1996 pursuant to Article 4 of Council Regulation   <ind> <ind> No. 4064/89  1.<ind> On 9 September 1996 Baxter International Inc. notified to the Commission an operation whereby it will  acquire the whole of Immuno International AG.  2.<ind> After examination of the notification, the Commission has concluded that the operation falls within the  scope of Council Regulation No. 4064/89 and does not raise serious doubts as to its compatibility with the  common market and with the functioning of the EEA agreement.  THE PARTIES AND THE OPERATION  3.<ind> The case was notified on 9 September 1996.  The proposed operation consists in the acquisition, by way  of purchase of shares, of the whole of the Switzerland-based company Immuno International AG ("Immuno") by  the US undertaking Baxter International Inc. ("Baxter"). Both of them are manufacturers of plasma derivatives  and other pharmaceutical products. The acquisition of the entire share capital of Immuno will take place in three  consecutive steps; however, Baxter will have sole control over Immuno from the first step, with the acquisition  of 54,32 % of the voting rights.   CONCENTRATION  4.<ind> As stated above, Baxter will have sole control over the whole of Immuno from the moment of the  closing of the first step of the operation. Furthermore, it will take over full responsibility for and control over  Immuno's management and operation from this moment. It will also have a majority on the Board, where there is  not any qualified majority requirement. The acquisition of Immuno by Baxter constitutes thus a concentration  within the meaning of article 3(1)b of the Council Regulation 4064/89, of 21 December 1989 (the "merger  regulation").  COMMUNITY DIMENSION  5.<ind> The combined Worldwide turnover of the parties exceeds 5 000 million ECU (Baxter 7 439 mECU;  Immuno 405 mECU).  The aggregate Community-wide turnover of each of those undertakings is more than 250  mECU (Baxter 960 mECU; Immuno 334 mECU). They do not achieve more than two-thirds of their  Community turnover in one and the same Member State.  The proposed concentration has therefore a  Community dimension.  COMPATIBILITY WITH THE COMMON MARKET  Relevant Product Markets  6.<ind> The notifying party's approach to market definition is in line with previous Commission decisions in the  pharmaceutical sector [Case IV/M.555 Glaxo / Welcome; Case IV/M.495 Behringwerke AG / Armour Pharma  Co, et al.], that is, a product market definition based on internationally agreed therapeutic categories of drugs  (mainly the Anatomical Therapeutic Classification, "ATC", used by the World Health Organization) adapted to  the specific products particularities and uses. The Commission stated in the above said decisions that products  derived from plasma are in a special domain in the pharmaceutical world. This is so mainly by reason of their  particular characteristics in terms of collection, production and use.   7.<ind> The main area affected by the operation is the one for the manufacture and sale of plasma derivatives.  Within this area five affected markets have been identified by the parties:  <ind> a)<ind> Albumin products (Concentrated Albumin and Plasma Protein Fractions) are the oldest known  plasma fraction products, which are mainly used in major surgery cases where patients lose large quantities of  blood in the treatment of shock and burns. On the basis of quantity, these are the most important products in the  plasma derivatives market. They have been in the market for the past 50 years and there are no significant  worldwide patents in force today.  <ind> b)<ind> Intravenous Immunoglobulins (IVIG) are currently used to protect patients against infectious  diseases and to treat patients with auto-immune diseases. They were first introduced in Europe in the late 1960's.   IVIG are sold lyophilized and in liquid form; the development of liquid preparations have made administration  easier and increased their acceptance.  <ind> c)<ind> Factor VIII is a specific plasma protein, which is missing in patients suffering from haemophilia  A. Factor VIII enables the treatment of those patients by substituting the missing factor. These  concentrates  have been used for over two decades to treat patients with this deficiency, and during this period significant new  technologies concerning purification and virus activation have been developed. Another significant innovation  are recombinant products (produced from non human mammalian by way of genetic engineering), which  appeared on the market in 1993-94.    <ind> d)<ind> Factor IX, including Prothrombin Complex Concentrate (P.C.C., a concentrate of which the  active ingredients are Factors II, VII, IX and X), is used to treat patients with haemophilia B, a condition caused  by a deficiency in the coagulation factor, as well a number of other coagulation disorders occurring occasionally.    <ind> e)<ind> Products for the treatment of bleeds in haemophilia patients with inhibitors. Those are the  products used to treat Haemophilia A and B patients who develop inhibitors that neutralize the infused Factor  VIII and Factor IX. These patients face, in case of severe bleeds, a life threatening situation.  Current options for  the treatment of these patients include Plasma derived Activated Prothrombin Complex Concentrate (APCC),  P.C.C., Porcine Factor VIII and Activated Factor VII.  In the opinion of the notifying party, all these treatments  form one product market.  8.<ind> The two companies' research programs do not overlap except for general viral inactivation research  which is generalised within this industry.  Conglomerate aspects are not significant either. If Baxter has a wide  range of activities including kidney failure products, cardiovascular products, supply of medical equipment to  hospitals and others, Immuno's activity is primarily dedicated to plasma derivatives the reminder being vaccine  development.   Relevant Geographical Markets  9.<ind> For the geographic market definition, the notifying party also adopts the Commission's line, albeit asking  it to give full weight in its assessment to the trend towards a European-wide market for plasma. According to the  notifying party, this trend is greatly due to the fact that plasma derived products have benefitted from the  European harmonization process. Since the beginning of 1995 pharmaceutical companies have the possibility  (and the obligation in the case of biotechnological products, such as recombinant medicines) to submit an  application for authorization of new medicines by the European Commission to the European Medicines  Evaluation Agency (EMEA).   10.<ind> However, the geographical reference markets for the sale of medicines, including plasma derivates,  remain essentially national for the purposes of a competition assessment.  The sale of medicines is influenced by  the administrative or purchase policies adopted in Member States by national health services. In addition to that,  there exist significant differences in prices for similar products, market shares, branding, distribution and other  previously stated elements (cfr. footnote 1) which clearly show the national character of these markets.  11.<ind> For the above reasons, the impact of this concentration has to be assessed in relation to national  markets.  ASSESSMENT  12.<ind> Annex 1 provides the share of sales at EU level for the product markets identified above. The industry  of plasma derivatives in the EU is relatively concentrated, the main players being Centeon (the result of the  merger between Armour and Bheringwerke), the merged entity Immuno+Baxter, Alpha and Bayer.  13.<ind> There are in addition, a number of smaller players (such as Biotest, Octapharm, etc...) which very often  play a significant role at national level. The not for profit organizations also have an important position in their  respective domestic markets. At this national level, the parties appear to have important market shares (above  25%) in the following relevant markets (see also annex 2 for details  about the overlap and the market share of  the main competitors):  <ind> -Factor VIII. In Germany [between 35-45%], Italy [between 45-55%], Spain [between 35-45%]and  Sweden [between 35-45%].   <ind> -IVIG: Sweden [between 55-65%]  <ind> -Treatment of bleeds in haemophilia patients with inhibitors.: The parties have an estimated share of  overall sales in the EU of [between 75-85%]; the notifying party has not been able to provide market shares at  national level, due to absence of data. During its enquiry, the Commission has had confirmation of the  unreliability of data for this product market.  Factor VIII  14.<ind> With respect to Factor VIII, the parties will become the EU leaders in sales, with an overall estimated  share of [between 25-35%]. Only Centeon will approach the size of the merged entity at EU level. All other  competitors are smaller in size, although significant in individual relevant markets (which remain national).  15.<ind> In its decision in the Case 495 (Behringwerke / Armour Pharmaceutical), the Commission stated that  the market for factor VIII is undergoing a significant change due to the introduction of recombinant products  (i.e. those produced  from non-human sources by way of genetic engineering).  Baxter, Bayer, and more recently  Centeon, seem to remain the only worldwide manufacturers of recombinant Factor VIII. The share of the  recombinant product is estimated at 60% to 70% for the year 2000 by market operators. Immuno, however, is  not involved in recombinant Factor VIII, so there will be no addition of shares or reinforcement of Baxter's  position in this area. The proposed concentration will not have any significant impact in the development of this  technology.  16.<ind> Furthermore, in its clearance of the merger between Armour and Behring, the Commission took into  account the competition induced among Factor VIII suppliers by the continuous innovation to improve product  purity and achieve virus safety. Finally, the Commission also took into account that demand is composed of a  small number of clinics, each accounting  for a large proportion of the sales of individual suppliers. Clinics often  use yearly tender procedures to procure their supplies of Factor VIII products, and therefore should in principle  be able to constrain the merged entity's behaviour as long as there are alternative suppliers.  17.<ind> The above considerations still apply not only to Germany, but also to Italy, where significant  competitors will remain; to Spain, where Immuno has traditionally had a very weak position [Deleted business  secrets]; and Sweden,  where, as in Germany, most of the sales fall to a reduced number of clinics which use  typically annual tender procedures or long term contracts. Thus, dominance is not likely to arise for Factor VIII  in any of the affected national markets.   IV IG  18.<ind> In Intravenous Immunoglobulins (IVIG), the parties attain a high market share in Sweden only. In  other Member States, their share is [Deleted business secrets]. The Swedish IVIG market value amounts to  around 7 million ecus.   19.<ind> IVIG market shares have dramatically changed in the last years. If Pharmacia/Upjohn accounted for  nearly all sales in Sweden in 1984, it had been replaced by Sandoz three years later. Sandoz's share was  dramatically reduced by the entry of Baxter, Immuno and the re-entry of Pharmacia/Upjohn in the period from  1990 to 1995. Sandoz's monopoly position has been thus reduced to a market share of less than 10%. Besides,  Centeon and Bayer have registered products in Sweden, which combined with tendering procedures by a small  amount of large hospitals would allow for effective entry in a short period of time. Furthermore, the parties  argue that the expected switch from lyophilised IVIG to liquid IVIG in Sweden will further erode their market  share, since they do not have liquid IVIG. Certain practical advantages of liquid IVIG vs. lyophilised IVIG in  terms of safety, stability or convenience of use (the product does not have to be reconstituted) have been  described by almost all of the Hospitals contacted by the Commission during its enquiry. None of these hospitals  have expressed any concerns about the proposed concentration.  20.<ind> Given the above reasons, and particularly the highly concentrated structure of the demand side in IVIG  combined with the remarkable fluctuation of market shares in this area, the proposed operation is not likely to  result in any creation or reinforcement of a dominant position in the IVIG market in Sweden.  Treatment of bleeds in haemophilia patients with inhibitors (TBHPI)  21.<ind> The parties will enjoy very high market shares in this limited market. After the operation there will  remain only three other actual competitors in the EEA as a whole, i.e. Speywood (UK), LFB (France) and Novo  Nordisk (Denmark).  22.<ind> Given the above considerations, the Commission focused a large part of its enquiry in the investigation  of the characteristics of this market and the assessment of the impact of the operation on it.  During the course  of this enquiry, the main customers of TBHPI products as well as the actual and potential competitors were  contacted.  23.<ind> The estimated value of this market is ECU 52 million for the whole EEA; the number of patients which  are treated with these products is about 1.000 in this geographical area. The parties are active in the segment of  the APCC, with Baxter's Autoplex and Immuno's FEIBA. This last product has historically been the most widely  used option. Among the competitors' products in this area ACSET (LFB), Hyate:C (Speywood) and NovoSeven  (Novo Nordisk) can be mentioned.   24.<ind> However, Baxter's Autoplex EU market share is reduced and has decreased to some extent in the last  years [Deleted business secrets]).  The notifying party argues that this position is deemed to erode further  because, according to them, this product is not as readily available as competing products; nor does it exist in  high potency formulation. Moreover it is not indicated for Haemophilia B patients (while most competing  products are). Differences in the process of virus inactivation, [Deleted business secrets], were also noted by  some customers as the reasons for a possible reduction of its use in the future.  25.<ind> More important are the market changes produced by the recent introduction of NovoSeven by Novo  Nordisk.  NovoSeven is a recombinant activated Factor VII concentrate, which competes with the other  treatment options in most of the EEA.  This concentrate is widely perceived in this market as having significant  therapeutical qualities in terms of safety and efficacy,  which potentially make it a very promising product, which  could even become the "product of choice" in the medium term.  26.<ind> Although the specific nature of this market makes any evolution forecast highly speculative, the  Commission has had confirmation that NovoSeven has already gained a large market share at EU level in a  significatively short period of time.  Thus, since its marketing approval in the EU on 23 February 1996 until  August 1996, it gained a significant market share at EU level.  This fact, together with the highly flexible market  evolution patterns that it evidences, are extremely likely to neutralise any potential dominance situation in this  market.  27.<ind> Furthermore, the role of Immune Tolerance Induction protocols, designed to eradicate the formation  of inhibitors, also has to be taken into account. These protocols could have the effect of further reducing the  number of patients who have to be treated with these specialized TBHPI products.  This is so because patients  which are successfully treated with these protocols get permanently free of the inhibitors and can subsequently  be treated with standard plasma products.  Such programmes, pioneered in Germany (about twenty years ago)  and in Sweden,  have become increasingly used throughout the EU over the last three years.  28.<ind> The concentration of the demand, the purchasing patterns and the volatility of the market are additional  facts that  militate against any dominance situation.  All those reasons ensure that, despite the high market shares  that the new entity will enjoy in this market, competition will be maintained and no dominant position will be  created or reinforced with the proposed operation.   Other considerations  29.<ind> In its enquiry, the Commission has contacted the main hospitals in the EU in the area of plasma  derivatives, as well as the main competitors. None have expressed any concerns about the concentration, except  two competitors that have expressed reservations about the extent of the range of plasma derivatives combined  by the merged entity, which in theory could raise the possibility of bundling. However, this potential danger has  not been substantiated by these competitors. There are several competitors active in the plasma derivatives  markets such as Alpha, Bayer, Upjohn/Pharmacia and Centeon, and possibly a number of the smaller  competitors. The only area where the parties are present on their own is the specialised market of the treatment  of bleeds in haemophiliac patients with inhibitors, which represents less than 4% of the plasma derivatives  markets. Furthermore, no evidence of bundling has been found after the concentration between Behringwerke  and Armour in 1995  Possible oligopolistic dominance  30.<ind> With this second concentration, the plasma derivatives markets become relatively concentrated.  Nevertheless, given the highly specialised needs of patients and their great product awareness and given the basic  characteristics of demand, with a limited number of hospitals, and the importance of product innovation, in  particular the development of recombinant technologies, it seems unlikely that the proposed concentration will  create or reinforce a collective dominant position in the affected markets. Furthermore, firms in these markets  are very heterogeneous, in terms of size, market shares in each Member State and degree of specialisation.  CONCLUSION  31.<ind> Based on the above information, the Commission has decided not to oppose the concentration and to  declare it compatible with the common market and with the functioning of the EEA Agreement.  This decision is  adopted in application of Article 6(1)(b) of Council Regulation No 4064/89.  For the Commission  ANNEXE I   <tab> Albumine <tab>  <tab>  <tab> Factor IX <tab>  <tab>  <tab> IVIG <tab>    <tab>  <tab>  <tab>  <tab>  <tab>  <tab>  <tab>  <tab>   Total EEA market <tab> 359,2 <tab>  <tab>  <tab> 60,9 <tab>  <tab>  <tab> 225,8 <tab>   (mecus) <tab>  <tab>  <tab>  <tab>  <tab>  <tab>  <tab>  <tab>   NFP <tab> [ between 30-40%] <tab>  <tab> Centeon <tab> [between 40-50%] <tab>  <tab> NFP <tab>  [between 15-25%]  Marcucci <tab> [between 15-25%] <tab>  <tab> Immuno+Baxter   <tab> [between 15-25%] <tab>  <tab> Sandoz <tab> [between 15-25%] <tab>   Centeon <tab> [between 15-25%] <tab>  <tab> LFB <tab> [between 5-15%] <tab>  <tab> Immuno+Baxter   <tab> [between 15-25%] <tab>   Immnuno+Baxter   <tab> [between 10-15%] <tab>  <tab> Alpha <tab> [between 5-15%]  <tab>  <tab> Centeon <tab> [between  5-15%]  Alpha <tab> [between 5-10%] <tab>  <tab> BPL <tab> [between 5-15%] <tab>  <tab> Biotest <tab> [between  5-15%]  Biotest <tab> [below 5%] <tab>  <tab> Marcucci <tab> [below 5%] <tab>  <tab> Bayer <tab> [between 5- 15%]   <tab>  <tab>  <tab> Others <tab> [between 5-15%] <tab>  <tab> Marcucci <tab> [between 5-15%]   <tab> 100% <tab>  <tab>  <tab> 100% <tab>  <tab> Others <tab> [below 5%] <tab>    <tab>  <tab>  <tab>  <tab>  <tab>  <tab>  <tab> 100% <tab>   [Deleted business secrets] <tab>  <tab>  <tab> [Deleted business secrets] <tab>  <tab>  <tab> [Deleted business  secrets] <tab>    <tab>  <tab>  <tab>  <tab>  <tab>  <tab>  <tab>  <tab>    <tab> Factor VIII <tab>  <tab>  <tab> Haemophilia <tab>  <tab>    <tab>  <tab>  <tab>  <tab>  <tab>  <tab>  <tab>  <tab>   Total EEA market <tab> 493,9 <tab>  <tab>  <tab>  <tab>  <tab>  <tab>  <tab>   (mecus) <tab>  <tab>  <tab>  <tab>  <tab>  <tab>  <tab>  <tab>   Immuno+Baxter   <tab> [between 25-35%] <tab>  <tab> Immuno+Baxter <tab> [between 75-85%] <tab>  <tab>  <tab>   Centeon <tab> [between 25-35%] <tab>  <tab>  <tab>  <tab>  <tab>  <tab>  <tab>   BPL <tab> [between 5-15%] <tab>  <tab> Speywood <tab> [between 5-15%) <tab>  <tab>  <tab>  <tab>   Alpha <tab> [between 5-15%] <tab>  <tab> LFB          <tab> [between 5-15%] <tab>  <tab>  <tab>   Bayer <tab> [between 5-15%] <tab>  <tab>  <tab> 100 % <tab>  <tab>  <tab>  <tab>   Marcucci <tab> [between 5-15%] <tab>  <tab>  <tab>  <tab>  <tab>  <tab>  <tab>   LFB  <tab> [between 5-15%] <tab>  <tab>  <tab>  <tab>  <tab>  <tab>  <tab>   Others <tab> [between 5-15%] <tab>  <tab>  <tab>  <tab>  <tab>  <tab>  <tab>    <tab> 100% <tab>  <tab>  <tab>  <tab>  <tab>  <tab>  <tab>    <tab>  <tab>  <tab>  <tab>  <tab>  <tab>  <tab>  <tab>   [Deleted business secrets]  Annex 2  1995 mkt shares (by value)  (figures were deleted for reasons of business secrets and replaced by ranges)  1.<tab> Albumin  <tab> Italy  <tab> Mkt value (mECU): <tab> 126.1  <tab> Mkt shares:  <tab> <tab> B+I:<tab> [25-35]  <tab> <tab> Marcucci:<tab> [55-65]  <tab> <tab> Others:<tab> [15-25]  2.<tab> Factor IX  <tab> Spain  <tab> Mkt value (mECU):<tab> 2.1  <tab> Mkt shares:  <tab> <tab> B+I:<tab> [15-25]  <tab> <tab> Centeon:<tab> [55-65]  <tab> <tab> Grifols:<tab> [15-25]  <tab> <tab> Others:<tab> [5-15]  3.<tab> IVIG  <tab> Germany  <tab> Mkt value<tab> 44.2  <tab> Mkt shares  <tab> B+I:<tab> [15-25]  <tab> Centeon:<tab> [25-35]  <tab> Bayer:<tab> [15-25]  <tab> Sandoz:<tab> [15-25]  <tab> Others:<tab> [15-25]  <tab> Spain  <tab> Mkt value<tab> 16.5  <tab> Mkt shares  <tab> B+I:<tab> [15-25]  <tab> Bayer:<tab> [45-55]  <tab> Grifols:<tab> [25-35]  <tab> Others:<tab> [below 5%]  <tab> Sweden  <tab> Mkt value<tab> 6.9  <tab> Mkt shares  <tab> B+I:<tab> [55-65]  <tab> Pharma:<tab> [25-35]  <tab> Sandoz:<tab> [5-15]  <tab> Others:<tab> [below 5%]  4.<ind> Factor VIII  <tab> Germany  <tab> Mkt value<tab> 230.4  <tab> Mkt shares  <tab> B+I:<tab> [35-45]  <tab> Centeon:<tab> [35-45]  <tab> Bayer:<tab> [5-15]  <tab> Others:<tab> [15-25]  <tab> Italy  <tab> Mkt value<tab> 32.7  <tab> Mkt shares  <tab> B+I:<tab> [45-55]  <tab> Marcucci<tab> [35-45]  <tab> Centeon:<tab> [5-15]  <tab> Others:<tab> [below 5%]  <tab> Spain  <tab> Mkt value<tab> 27.9  <tab> Mkt shares  <tab> B+I:<tab> [35-45]  <tab> Bayer:<tab> [35-45]  <tab> Others:<tab> [15-25]  <tab> Sweden  <tab> Mkt value<tab> 21.9  <tab> Mkt shares  <tab> B+I:<tab> [35-45]  <tab> Centeon:<tab> [15-25]  <tab> Others:<tab> [35-45]  5.<ind> Inhibitors for the treatment of bleeds in haemophilia patients  <tab> (Data n.a.)