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Novartis gives up on planned $1B generic drug sale to Aurobindo

Swiss pharma Novartis said on Wednesday it’s terminating a potential $1 billion agreement to sell its Sandoz U.S. generic oral solids and dermatology businesses to Aurobindo Pharma after failing to win Federal Trade Commission approval.The deal, announced in September 2018, couldn’t get the OK from the FTC “within anticipated timelines,” Novartis said in an April 2 statement.As recently as January, Novartis executives told investors they expected the transaction to close in the first quarter of this year. The decision to end the deal was mutual, Novartis said.

The Swiss drugmaker and India-based Aurobindo aren’t alone in finding themselves under increased FTC scrutiny.

Pharmaceutical deals that once would have sailed through are increasingly being slowed down by regulators. One of the most-watched examples came last year with Roche’s $4.8 billion purchase of Spark Therapeutics, which prompted a 10-month FTC investigation that finally ended last December with an approval.

The FTC also made Bristol-Myers Squibb sell off a psoriasis drug before buying Celgene, and AbbVie and Allergan sold rights to an experimental digestive disease drug to help fend off FTC concerns about their merger.

Novartis and Aurobindo initially expected their transaction to be completed in 2019. In October, Novartis said the FTC had new requests that had slowed down approval, The Economic Times reported, though the company declined to give details.

The three-sentence release announcing the termination of the deal also had no details on the issues that concerned the FTC.

The transaction included about 300 products that had sales of some $600 million during the first half of 2018, Novartis said when originally announcing the deal. The company also planned to part with three manufacturing facilities — in Wilson, North Carolina; Hicksville, New York; and Melville, New York.

Aurobindo would have paid Novartis $900 million up front and then as much as $100 million in additional milestone payments.

Novartis has been sharpening its focus on pharmaceuticals, shedding businesses such as its portion of a consumer healthcare venture while simultaneously growing its presence in areas such as oncology and immunology.

Aurobindo, meanwhile, hoped to gain market share in the U.S. through its now-fizzled deal with Novartis. The deal would have vaulted the company to second largest by number of generic prescriptions.