In a settlement announced Wednesday, the Federal Trade Commission (FTC) said it has resolved its ongoing investigation of Pfizer's proposed $68 billion acquisition of Wyeth and concluded that the transaction does not raise anticompetitive concerns in any human health product markets.
However, to "preserve competition in multiple American markets" for animal pharmaceuticals and vaccines, "significant divestitures" need to take place, the FTC said.
Currently, Pfizer is the largest prescription pharmaceutical company in both the United States and the world, with $48.4 billion in worldwide revenues for 2008. Pfizer also researches and develops new pharmaceutical products. At the end of 2008, Pfizer had 114 products in various stages of clinical development, according to an FTC statement.
Wyeth's worldwide annual revenue totaled about $22.2 billion in 2008—$16.8 billion of which was from pharmaceutical and biological sales, according to the FTC.
In its investigation, the FTC stated that they evaluated numerous potential overlaps where the companies could compete against each other, "either now or in the future." In particular, the investigation included analysis of four markets—treatments for renal cell carcinoma, Methicillin resistant Staphylococcus aureus (MRSA) infections, osteoporosis, and Alzheimer's disease. The FTC said the evidence demonstrates that it will not "undermine competition" in those markets.
Also, the FTC staff evaluated whether the acquisition could change the negotiating power between Pfizer and its customers. At issue was whether consumers could be harmed through "unlawful tying, bundling, or exclusive dealing" by Pfizer. "After careful investigation, though, we conclude that the transaction is not likely to affect competition in this market" and that the companies' products "are unlikely to be close competitors," FTC said.
Prescription pharmaceutical customers, such as insurance companies, set up bid processes for purchasing pharmaceutical products on a product by product—or category by category—basis. They have generally resisted efforts by larger pharmaceutical companies to bundle their products across categories, unless the bundle is in the customer's "best interest." The FTC said it found no evidence that customers' ability to prevent anticompetitive bundling were undermined.