The Federal Trade Commission said Wednesday that Spanish health care giant Grifols SA will sell blood plasma collection centers in three U.S. cities in order to win the regulator’s approval of the company’s proposed $286 million purchase of Florida-based Biotest US Corp.
Without the divestiture of centers in Lincoln, Nebraska; Augusta, Georgia; and Youngstown, Ohio, the deal would have created a monopoly for the collection of plasma, a key ingredient in medicines that treat “immune system disorders, lung and blood conditions, trauma and infectious disease,” the FTC said.
Grifols and Biotest US are the only companies that have centers in those cities, and under the deal the Spanish company will divest them to KedPlasma, a subsidiary of global plasma products manufacturer Kedrion Biopharma Inc.
Most people are willing or able to travel only a relatively short distance for plasma collection, leaving them few alternatives to a Grifols or Biotest facility without driving a long distance, the FTC said.
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“Absent the divestiture of plasma collection centers in Lincoln, Nebraska, Augusta, Georgia, and Youngstown, Ohio, the proposed transaction would likely lead to diminished service and quality, as well as longer wait times for donors in these markets,” the FTC said in a press release. “Also, absent the divestiture, Grifols likely would be able to exercise market power by unilaterally decreasing donor fees at one or both of the plasma donor centers in each of the three geographic areas.”
In Nebraska, centers owned by Grifols and Biotest are within a mile of each other, with the closest alternative an hour’s drive away, according to the FTC’s complaint. In Georgia, the centers are 6 miles apart, and in Ohio, 9 miles, with competing centers more than an hour away.
The FTC also said it was concerned that without the sell-off the merger could harm the U.S. market for an injectable medicine made from plasma that helps prevent hepatitis B. That was due in part to Biotest US’s large stake in ADMA Biologics Inc., the leading maker of the hepatitis B medicine in the U.S., which competes with Grifols and just one other supplier.
Because there is no alternative to the hepatitis B medicine, known as HBIG, and there are strict limits on where it can be made, the regulator said that without the divestiture the market would have concentrated and competition would have been eliminated.
However, Biotest US recently transferred its ownership share in ADMA to its parent company, and Grifols will not acquire any interest in ADMA under the merger, the FTC said.
“Acquiring the ownership interest in ADMA would have given Grifols an incentive to increase the price of its HBIG product,” the agency said.
The FTC added that under the proposed consent agreement, Grifols can’t purchase an ownership interest in ADMA or buy back its collection centers without prior notification.
Grifiols, which had $4.3 billion in net revenues in 2016, announced the proposed $286 million merger to buy the much-smaller Biotest in December.
In a statement Wednesday, Grifols said the deal would include the acquisition of 26 plasma donation centers for a total of 249, and give it better access to the raw ingredient in “plasma-derived therapies.” The company already owns 35 centers in Europe after it purchased Haema AG, which was Germany’s largest independent network of donation centers, in March for €220 million ($256 million).
The deal was financed with existing money and without issuing debt. Osborne Clarke SLP acted as legal adviser for the transaction.
Date: August 6, 2018
Source: law360