Astra, Pfizer deal could face Chinese antitrust hurdle

LONDON Thu May 1, 2014 12:58pm EDT

The Pfizer logo is seen at their world headquarters in New York April 28, 2014. REUTERS/Andrew Kelly

The Pfizer logo is seen at their world headquarters in New York April 28, 2014.

Credit: Reuters/Andrew Kelly

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LONDON (Reuters) - Pfizer's (PFE.N) plan to buy AstraZeneca (AZN.L) for around $100 billion could face antitrust hurdles in China, where the two companies rank No. 1 and No. 2 among multinational suppliers in the prescription drug market.

The need for merger clearance from Beijing would come on top of antitrust approval in the United States and Europe and could potentially delay proceedings, according to people familiar with the situation.

Julian Huppert, member of parliament for Cambridge, where AstraZeneca intends to build a new research centre and headquarters, said China was likely to look hard at the deal, especially after a bribery scandal last year involving drugmaker GlaxoSmithKline (GSK.L).

"I know China is concerned. From China's perspective, these are their two major suppliers potentially merging into one, and given their history with GSK, there is some obvious nervousness there," Huppert told Reuters.

China's six-year-old anti-monopoly law is playing an increasing role in international deals, forcing often painful delays. Some see its antitrust regime as an industrial policy tool.

China's fast-growing market is a lure for global firms. Drug sales in the country, which totalled $82 billion in 2012, are expected to reach $160-190 billion by 2017, making it the second-biggest market behind the United States, according to IMS Health.

Pfizer has yet to make a firm offer for AstraZeneca after having two approaches rebuffed, and a company spokesman said it was "premature to speculate on any specific impacts in specific geographies".

Glencore Xstrata (GLEN.L) is a recent example of a company that ran into problems with China's Commerce Ministry (MOFCOM). Glencore agreed to sell a Peruvian copper mine to secure approval from China for its takeover of miner Xstrata.

A Chinese antitrust review has also contributed to a delay in a tie-up between Omnicom (OMC.N) and Publicis (PUBP.PA).

(Reporting by Ben Hirschler; editing by Jane Baird)

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