Novartis AG can acquire MorphoSys AG

The Bundeskartellamt has cleared the planned acquisition by Novartis AG (Switzerland) of all shares in MorphoSys AG, based in Planegg near Munich, in the first phase of merger control. MorphoSys is a global biotechnology company specialising, in particular, in the development of drugs for leukaemia (blood cancer). Novartis produces and develops drugs for use in nearly all major medical fields. In its oncology research Novartis also focuses on leukaemia.

Andreas Mundt, President of the Bundeskartellamt: “In the case at hand one of the world’s largest pharmaceutical companies intends to acquire one of Germany’s largest biotech companies. We have looked at the merger very carefully to make sure it will not negatively affect competition with respect to the research and development of new drugs for a certain type of leukaemia. Having examined the merger, we have no serious competition concerns about the project. A large number of possible alternative active substances are in development, and we also expect generics to provide competition. The case also demonstrates, once again, the relevance of the transaction value threshold, which was incorporated into the German Competition Act (GWB) in 2017. Without this provision we would not have been able to examine this case, even despite its great economic significance.”

The transaction value threshold allows the Bundeskartellamt to examine under competition law mergers where companies or assets which (at the time of the merger) generate little or no turnover are acquired at a purchase price of more than 400 million euros. The parties have agreed that Novartis will acquire MorphoSys by way of a voluntary public takeover bid at an equity value of 2.7 billion euros or 68.00 euros per share.

In the case at hand the Bundeskartellamt’s examination focused on the research and development of active substances for the treatment of myelofibrosis. Myelofibrosis is a type of leukaemia which can be cured by bone marrow transplantation in only few cases. For the first time a new active substance developed by MorphoSys (“Pelabresib”) is close to being authorised and marketed in Europe. In the future “Pelabresib” is intended to be used in the treatment of myelofibrosis in combination with Novartis’s “Ruxolitinib”, a substance which has already been on the market for over a decade. As the use of “Ruxolitinib” or comparable active substances in first-line treatment has in some cases not been as effective as desired in treating the condition’s severely debilitating symptoms, research companies such as MorphoSys are currently conducting numerous studies on possible alternative active substances which might be used in an effective combination treatment and/or second-line treatment. Novartis currently has no such projects in its research pipeline.

The Bundeskartellamt’s investigations have shown that a large number of possible alternative active substances to “Pelabresib” and “Ruxolitinib” are in development and that, already within the forecast period, generics can be expected to provide competition. Based on these findings, the Bundeskartellamt does not expect the merger to significantly impede effective competition in the affected markets with respect to active substances for myelofibrosis treatment that are in development or already on the market. The proposed merger could be cleared within the one-month deadline of first-phase merger control.