UK regulator probes $39bn AstraZeneca tie-up with Alexion

The UK competition regulator is probing AstraZeneca’s $39bn takeover of US biotech group Alexion after raising potential antitrust concerns.

The Competition and Markets Authority said on Tuesday it was investigating the deal signed in December when AstraZeneca — a key Covid-19 vaccine producer — agreed to buy US company Alexion, a biotech specialising in treatments for rare diseases. 

The UK regulator said the deal had met its test for a relevant merger — meaning there was a risk that the two companies would cease to be distinct, and had met the threshold for the CMA to investigate. 

The CMA has set a deadline of June 3 to receive views from interested parties and has until July 21 to decide whether to launch a more in-depth investigation.

AstraZeneca said it still expected the deal to close in the third quarter. “The commencement of the UK CMA’s formal review is another important step towards closing of the proposed acquisition,” the company said. 

The deal has already been approved in ten countries, including by the US Federal Trade Commission and is being examined by regulators in the EU and Japan. More than 99 per cent of AstraZeneca and Alexion shareholders recently voted in favour of the deal. 

The $39bn acquisition is designed to add five approved medicines and a pipeline of 11 potential drugs, adding double-digit revenue growth until 2025 at the London-listed pharmaceutical company.

There is no significant geographic or product overlap between the two companies. AstraZeneca is hoping that Alexion’s research and development in the area of complement biology, which it has so far focused on rare diseases caused by uncontrolled activation of the immune system, could be used for more common conditions, including cancers.

But the UK regulator has a broad discretion to justify analysing mergers that could affect UK markets, and has taken an increasingly flexible approach to the tests it uses to intervene. In February 2020 the CMA looked at US biotech company Roche’s planned $5bn acquisition of fellow US company Spark despite the fact the latter had no UK turnover. The CMA said Spark’s research and development activities in Britain justified a phase 1 analysis, but did not take the investigation further.

Alexion is based in Boston, Massachusetts, and books its largest sales in the US. It runs its international operations from Switzerland and sells its drugs in more than 50 countries, including the UK.

When AstraZeneca announced the deal last year, chief executive Pascal Soriot said it would strengthen the UK-based drugmaker’s position in the US, where it has been growing, especially in oncology. He said AstraZeneca could help Alexion expand in emerging markets, including China. 

Shares in AstraZeneca fell 0.4 per cent to £81.20p in morning trading in London. 

The CMA’s decision to probe AstraZeneca and Alexion comes as it weighs new approaches to dealing with pharma mergers. In March it joined regulators including the US Federal Trade Commission and the European Commission in a working group to consider expanding the “theories of harm” it uses when addressing big pharma deals.

CMA chief executive Andrea Coscelli said at the time that he wanted to “protect consumers from anti-competitive deals” in the sector, but noted “big pharma plays an essential role in our society”.

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