(Makes clear Merck KGaA/Generics UK fine included in Merck
KGaA's 21.4 mln total fine in paragraph 8)
By Foo Yun Chee
BRUSSELS, June 19 (Reuters) - European antitrust regulators
fined nine drugmakers, including Denmark's Lundbeck, a
total of 146 million euros ($195 million) for blocking the
supply of a cheaper anti-depressant to the market, the first EU
sanction against such deals.
The punishments follow a 2009 report by the European
Commission on the pharmaceutical sector, which said
"pay-for-delay" agreements between companies lead to consumers
paying as much as 20 percent more for their medicines.
The EU action came two days after the U.S. Supreme Court
said U.S. regulators could challenge deals between brand-name
drug firms and generic rivals because of the resulting higher
Pay-for-delay agreements involve brand-name firms paying
generic companies not to market rival versions of their
medicine. The generics usually cost a fraction of the original
drug, though the issue is complicated by patent ownership.
In this case, Lundbeck, one of the Nordic region's largest
drugmakers, was accused of paying other companies to have them
delay delivering a generic version of its anti-depressant
medicine citalopram to the market.
"Agreements of this type directly harm patients and national
health systems, which are already under tight budgetary
constraints," EU Competition Commissioner Joaquin Almunia said
on Wednesday. "The Commission will not tolerate such
The European Commission, which acts as competition regulator
across the 27-member European Union, handed Lundbeck the largest
fine, totalling 93.8 million euros. Lundbeck said it would
appeal the EU's decision but cut its guidance for operating
profits this year as a result of the fine.
The Commission fined Germany's Merck KGaA 21.4
million euros, of which 7.77 million euros was imposed jointly
on Merck and its former subsidiary Generics UK, which is now
owned by U.S. generic drugmaker Mylan.
India's No. 1 pharmaceutical company, Ranbaxy,
said it also plans to appeal to the EU General Court in
Luxembourg, Europe's second-highest, after it was fined 10.3
The other companies to be penalised were Arrow, Resolution
Chemicals, Xellia Pharmaceuticals, Alpharma - which is now part
of Zoetis Products LLC, and A.L. Industrier.
The EU sanctions and the U.S. court decision could force a
major change in the pharmaceutical industry, said Michael
Carrier, a professor at New Jersey-based Rutgers Law School.
"This week could be the most important week in the history
of this concerning activity: a game-changing U.S. Supreme Court
decision allowing these suits to proceed and the first fines
issued in the EU against this activity," he said.
The EU competition authority has two similar cases in the
pipeline, one involving Israel's Teva and French
drugmaker Servier, and another related to Johnson & Johnson
The Lundbeck case sets a precedent for EU regulatory
handling of such offences, said Deutsche Bank analyst Tim Race.
"This is the first case of likely many for which we will see
fines imposed," he wrote in a note.
The European Federation of Pharmaceutical Industries and
Associations lobbying group said patent settlements were
symptomatic of Europe's weak patent litigation system.
The Commission said the generic companies agreed with
Lundbeck in 2002 not to enter the market in return for
substantial payments, with internal company documents referring
to forming "a club" and "a pile of $$$" to be shared.
It said Lundbeck also bought rivals' stock and destroyed it.
Since Reuters flagged the EU's decision on June 3, Lundbeck
shares have lost 7.5 percent or 220 million euros of the firm's
market value, said Deutsche Bank's Race. The stock traded 1.28
percent higher at 1219 GMT on Wednesday.
(Additional reporting by Mette Fraende in Copenhagen, Kaustubh
Kulkarni in Mumbai and Ben Hirschler in London; editing by Rex
Merrifield and Elaine Hardcastle)