3 Indian pharma cos face EU anti-trust probe

Indian pharmaceutical companies Lupin Ltd, Matrix Laboratories and Unichem Laboratories have come under the European Union Competition Commission scanner for an alleged understanding with global players that could have led to delay in launching a generic version of a much-sought-after drug in the European market.

According to an anti-trust report dated July 8, the European Union alleged that firms such as Teva, Lupin, Matrix and Unichem’ arm Niche Generics have entered into agreements that might have hindered the market entry of a generic version of Servier’s perindopril, a hypertension medication. In April 2007, Lupin had sold certain patent and intellectual property rights of perindopril to French firm Laboratories Servier for Rs 115.31 crore (euro 20 million).

On Wednesday, the shares of Lupin went down 3% on BSE, while Unichem shares went down 2.7%.

A Lupin spokesperson said, “Lupin confirms that it is currently assisting the European Commission with its investigation in relation to the supply of perindopril in the EU. The investigation is still at an early stage and the commission has confirmed that the publication of its statement does not imply it has proof of an infringement of the competition rules. We feel confident about our position and are working with the European Commission to a resolution on the matter.”

BK Sharma, executive director, Unichem, said there was nothing wrong with its deal with Servier. “Niche Generics had entered the deal in 2005 with Matrix for marketing the finished product, perindopril, and later made an out-of-court settlement among three of us. We have responded to the EU refuting the allegations raised against Niche Generics.”

The probes come as the commission said in a report that companies use a variety of techniques to delay the introduction of generics “for as long as possible.” The commission, the EU’s executive arm, said it would continue to probe whether the use of patents to delay generics violates anti-trust rules. The commission said its investigation concerned unilateral behaviour by Servier and agreements which might have blocked the entry of generic perindopril, a cardio-vascular medicine, originally developed by Les Laboratoires Servier, into the European Economic Area.

In her final report of a probe into the pharmaceuticals sector, EU Competition commissioner Neelie Kroes said delays in bringing cheaper generic medicines to the market had pushed up consumers’ bills by 20% between 2000 and 2007. “We will not hesitate to apply the anti-trust rules where such delays result from anti-competitive practices,” Kroes, who is tasked with ensuring fair play in the 27-country European Union, said in a statement.

The commission’s final report follows an 18-month probe that began after raids at GlaxoSmithKline Plc, AstraZeneca Plc, Sanofi-Aventis SA and several companies. The commission conducted additional raids in November at some of these companies that are the subject of heightened investigations.

Makers of brand-name drugs were likely to face a decline in revenue starting 2011 when products generating $150 billion a year would have generic competition, analysts and investment advisers said last year. The EU spends euro 214 billion on medicines a year, or euro 430 a person, the commission’s preliminary report in November said.

“To reduce the risk that settlements between originator and generic companies are concluded at the expense of consumers, the Commission undertakes to carry out further focused monitoring of settlements that limit or delay the market entry of generic drugs,” it said.

The EU executive said it would examine current EU rules on price and reimbursement, urge European countries to introduce legislation to facilitate the entry of generics and stress the need for a Europe-wide patent.

“That’s something the commission can do something about,” said Frances Cloud, a London-based independent analyst. “The commission can reform the patent situation, and they can certainly directly ban out-and-out payments, which will presumably make originator companies a lot more cautious, but it’s not totally going to get rid of the deals.”