Assessing mergers in the pharmaceutical industry
The UK competition authorities recently cleared a healthcare merger resulting in a combined market share in excess of 90% for one of the relevant products, merely imposing a temporary price cap. This seemed to mark a departure from the European Commission’s approach to pharmaceutical merger cases, and its tendency to seek product divestments if market shares exceeded 40-50%.
The explanation lies in the role of regulation and buyer power in the UK health service, which featured prominently in the UK decision. In this bulletin, Frontier Economics explores the implications.