The European Commission said Wednesday that it has opened an in-depth investigation of the proposed $400 million acquisition of Takeda Pharmaceutical’s (TSE:4502;NYSE:TAK) TachoSil surgical sealant patch by Johnson & Johnson (NYSE:JNJ).
The commission said it is concerned that the acquisition by J&J’s Ethicon unit may reduce competition and innovation for the supply of dual haemostatic patches, used to manage the most problematic bleeding during surgery. TachoSil is Europe’s leading haemostat for those situations, according to a statement by commission EVP Margrethe Vestager.
“In this concentrated space, we need to carefully assess whether the proposed merger would lead to reduced choice for surgeons and patients, to higher prices for our health services, or to slower development of alternative solutions to manage problematic bleeding,” Vestager said in a news release.
Although Johnson & Johnson does not currently sell dual haemostatic patches in Europe and the UK, it does so elsewhere and “would have strong incentives” to enter those markets and hinder others’ ability to do so, Vestager added.
When the proposed acquisition was announced, Takeda said that adjusted net TachoSil sales reached $155 million during fiscal 2018, Takeda said. About 80 employees would move to Ethicon as part of the deal, the Japanese company said. Although Ethicon announced plans to buy the assets and licenses for the patch, Takeda would holding on to the plant in Linz, Austria, that makes TachoSil. A long-term manufacturing deal would go into place after the transaction’s close, which was expected during the second half of 2019, Takeda said at the time.
The commission accepted a request on Sept. 26, 2019 from Austria, Finland, France, Germany, Norway, and Spain to assess the acquisition of Tachosil by Johnson & Johnson under the EU Merger Regulation.
Johnson & Johnson has decided not to address the governing body’s preliminary concerns, according to the commission, which has until August 10, 2020, to take a decision.
Ethicon did not immediately respond to a request for comment.
