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Takeda wins EU approval for Shire takeover

A £46 billion takeover of Dublin-based biotech business Shire by Japanese pharmaceuticals company Takeda has been approved by the EU's competition watchdog.22 Nov 2018

The European Commission announced on Tuesday that it had given conditional approval to the acquisition going ahead. Takeda will be required to sell off rights to a drug Shire is developing for inflammatory bowel disease (IBD) under the terms of the approval.

The condition was stipulated after a Commission investigation found that Takeda would be "unlikely to continue developing" Shire's new drug after the acquisition was complete since it already offers its own drug for treating IBD. It said that scenario put innovation and future competition at risk.

According to a statement issued by the Commission, Takeda has offered to "divest Shire's pipeline product … including the rights to its development, manufacturing and marketing, to a purchaser that would have an incentive to develop the drug" – a commitment that the regulator has accepted as a basis for signing off the Japanese company's deal for Shire.

EU competition commissioner Margrethe Vestager said: "There are many diseases with only a limited number of effective and safe treatments. Inflammatory bowel disease is one such case. It is a lifelong condition with devastating effects on people's lives. Therefore, it is essential that companies continue developing promising new products to treat it."

"We can today approve the merger between Shire and Takeda, but only subject to the divestment of the product that Shire is developing to treat the disease and which could have been lost through the merger. This will preserve innovation in this market and, importantly, increase the choice of treatments for patients," she said.

Takeda first announced in May this year that it had agreed a £46bn deal to acquire Shire. In a joint statement issued at the time, the companies said the merged business would become the global leader in combating rare diseases. Shire directors had rejected four previous bids from Takeda for the company before recommending to their shareholders that they approve the May offer. 

At the time, corporate law expert Thilo Schneider of Pinsent Masons, the law firm behind, said the deal struck between Shire and Takeda reflected a broader trend in pharmaceutical sector mergers and acquisitions of buyers "looking for access to new products to replace decreasing revenue from ageing patents".

Reacting to the latest announcement, Schneider said: "Having acted on an EU-mandated multi-million pound disposal of a life sciences business before, I am not surprised by the condition attached to this approval and this reflects our experience in the Commission’s approach to large scale mergers in the pharmaceutical space."

Competition law expert Alan Davis of Pinsent Masons said the remedy imposed by the Commission as a condition of clearance reflects the traditional approach it applies to mergers in the pharmaceutical sector.

"The Commission assesses the competitive overlaps between products being actively marketed by one of the parties with pipeline products being developed by the other party, or overlaps between pipeline products being developed by both parties," Davis said. "The aim of the Commission is to preserve innovation and product choice in the market by requiring the divestment of a pipeline product which could have been lost through the merger. This approach is similar to the remedy imposed in a previous EU merger involving Pfizer and Hospira."

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