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Novartis-Hexal Deal Gets EU OK Pending Product Divestitures

June 7, 2005

Novartis has agreed to sell products in three European countries to gain final European Union (EU) approval for its planned merger of German generic drugmaker Hexal AG and Hexal's U.S. sister company Eon Labs, the European Commission (EC) announced recently.

The EC asked Novartis to divest certain products in Poland, Germany and Demark -- a move that will help to preserve generic competition in those markets, the agency said. "Ensuring continued competition from generics is vital to keeping downward pressure on healthcare costs," EC Competition Commissioner Neelie Kroes said. "The commitments given by Novartis will maintain this competition and ensure that consumers continue to benefit from a choice of suppliers and lower prices."

Regulators in both Europe and the U.S. have been closely scrutinizing the acquisition, which if completed would create the world's largest generic drugmaker, ahead of current market leader Teva Pharmaceutical. Under the terms of the deal announced in February, Novartis has agreed to pay $8.3 billion for Hexal and Eon, which would be incorporated into Novartis' Sandoz unit.