UPDATE 1-EU to charge Servier,Lundbeck over generics-sources

Tue Jul 24, 2012 11:38am EDT

Related Topics

* EU Commission to send statement of objections this week

* Companies could face fines up to 10 pct of sales

* Cases concern pay-for-delay deals

By Foo Yun Chee

BRUSSELS, July 24 (Reuters) - EU antitrust regulators are to charge French drugmaker Servier and Danish peer Lundbeck in two separate cases this week related to blocking the entry of cheaper generic medicines into the market, three people familiar with the cases said.

The move, the first by the European Commission against "pay-for-delay" deals between brand-name companies and their generic competitors since a high-profile inquiry into the sector in 2009, could lead to hefty fines.

The EU regulators are likely to send statements of objections stating their concerns to Servier and Lundbeck in their respective cases in coming days, the people said on Tuesday.

Lundbeck said it had not prevented generic drugs from entering the market and was confident it was meeting EU rules.

"We are clear on this case that we are living up to EU regulations, " L undbeck's spokesman Anders Schroll said, adding that the firm had not received any notification from the European Commission about any further steps against it.

The Commission, which acts as competition regulator across the European Union, began an investigation into Servier in July 2009, concerned that deals with several generic drug companies may have blocked the entry of cardiovascular medicine perindopril into the EU market.

It also opened a separate investigation into Lundbeck in January 2010, on suspicion that the Danish company might have done the same with its anti-depressant drug citalopram.

Companies found guilty of breaching EU rules can be fined up to 10 percent of their global turnover.

That would amount to 390 million euros for Servier based on its 2010/2011 turnover and 16 billion Danish crowns for Lundbeck, based on its reported revenues last year. Regulators however rarely levy the maximum penalty in such cases.

AstraZeneca was fined 60 million euros in 2005 for misleading patent regulators between 1993 to 2000 in a bid to block competition to its ulcer drug Losec. An EU court trimmed the penalty to 52.5 million after the company challenged the ruling.

Worldwide sales of branded patent-protected medicines are expected to reach between $615 billion and $645 billion by 2016, according to healthcare information provider IMS Health. ID:nL2E8IBD84]

It estimates generic sales at between $400 billion and $430 billion.

Cases involving world No. 1 generics producer Teva , Johnson & Johnson and Novartis on suspected pay-for-delay deals are still ongoing.

The investigations were triggered by an EU regulatory inquiry into the pharmaceuticals sector in 2008 and 2009 which found that delays in bringing generic medicines to the market were costing European consumers billions of euros.

U.S. antitrust regulators are also examining pay-for-delay settlement deals and other tactics used to delay generics.

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