GSK/Pfizer Tie-Up Granted Clearance In Australia and New Zealand

A two-month-long inquiry into GSK and Pfizer's proposed consumer health joint venture by Australia's Competition and Consumer Commission has found no notable areas of concern for the country's OTC market. Meanwhile, New Zealand has also given the go-ahead for the combination. 

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GlaxoSmithKline PLC and Pfizer Inc.'s planned merger of their respective consumer health operations has taken a step closer to completion after the deal was given the green light in Australia.

Having launched a probe into the proposed joint venture in February, the Australian Competition and Consumer Commission on May 9 said it would not oppose the transaction. “After conducting market inquiries and analyzing documents and data provided by GSK and Pfizer, the ACCC considers that the transaction will not substantially lessen competition in any market in Australia,” it said.

The ACCC’s investigation into the deal concentrated in particular on whether GSK and Pfizer competed closely in the supply of pain relief, gastrointestinal, and cold and flu relief products in Australia. It pointed out that GSK and Pfizer supplied overlapping products in the following areas:

• Pain relief: GSK - Panadol (paracetamol), Voltaren Rapid (diclofenac). Pfizer - Advil (ibuprofen)

• Gastrointestinal products: GSK - ENO (sodium bicarbonate). Pfizer - De-Gas (simethicone), Nexium 24HR (esomeprazole)

• Cold and flu products: GSK - Panadol Cold and Flu (paracetamol), Otrivin (xylometazoline). Pfizer - Robitussin (paracetamol + dextromethorphan), Dimetapp (paracetamol + phenylephrine) 

Regarding the pain relief category, the Commission noted that GSK’s Panadol was among the market leading brands – along with Reckitt Benckiser’s Nurofen – whereas Pfizer’s Advil was notably less well known.

“We found that Nurofen would compete strongly with the pain medication produced by a combined GSK/Pfizer,” commented ACCC Commissioner Roger Featherston, adding that the JV would continue to face competition from the range of generic options available to consumers.

"Despite its strong brand recognition in the US and ongoing marketing expenditure in Australia, Advil’s limited brand recognition in Australia and its limited market share mean it is unlikely to be a strong constraint on the leading brands, Panadol and Nurofen, if the acquisition did not go ahead," Featherston said.

In relation to GSK's and Pfizer’s gastrointestinal, and cold and flu products, the ACCC said its investigation had not raised any major competition concerns. “Given the low market shares of these products and range of alternative options, the ACCC considered that the proposed acquisition was unlikely to substantially lessen completion in the wholesale or retail supply of gastrointestinal, or cold and flu products,” Featherston explained.

Announced at the end of last year, GSK and Pfizer’s all-equity deal gives the former a controlling 68% stake in the JV and brings together two consumer health businesses which had combined pro-forma global sales of £9.8bn ($12.7bn) in 2017. (Also see "GSK And Pfizer Start Consumer JV For Different Reasons, Aim For Similar Goals" - HBW Insight, 19 Dec, 2018.)

At the time, GSK and Pfizer said they could see little overlap in their product lines and expected to make limited brand divestments to satisfy potential regulatory concerns about their JV controlling anti-competitive portions of certain categories.

New Zealand Gives Nod

Approval for the JV in Australia came a week after New Zealand’s Commerce Commission granted clearance for the deal. The Commission’s investigation had focused particularly on GSK and Pfizer’s pain relief and cold and flu portfolios.

Chairman Dr Mark Berry said the Commission was satisfied that the acquisition was unlikely to substantially lessen competition in any New Zealand market. “We consider that GSK and Pfizer are not close competitors in the supply of cold and flu treatments, systemic pain relief treatments or any other consumer healthcare products, and that the presence of suppliers of competing products is likely to constrain the merged entity.”