Johnson & Johnson and Takeda have walked away from their $400 million surgical patch deal, which the Federal Trade Commission said was likely to be blocked on anti-competitive grounds.
Just shy of a year old, the transaction was first announced by Takeda in May 2019: The Japanese drugmaker would trade its TachoSil fibrin bloodstopper patch and about 80 employees to J&J’s Ethicon division as it looked to narrow its therapeutic focus following its massive buyout of Shire. The move also included a $3.4 billion cash deal with Novartis to offload its dry-eye drug Xiidra.
The deal would have given Ethicon control of TachoSil’s assets and licenses, though Takeda would retain its Austrian manufacturing facility and produce the surgical patch for the devicemaker under a long-term contract. However, the FTC took issue with J&J’s previous portfolio.
“The investigation focused on the potential loss of competition between TachoSil and Johnson & Johnson’s Evarrest—the only two fibrin sealant patches approved in the United States to stop bleeding during surgery,” FTC Chairman Joseph Simons said in an agency statement.
“As a result of that investigation, staff had significant concerns about the likely anticompetitive effects and had recommended that the commission block the transaction,” Simons said.
In addition, shortly after the deal was announced, Ethicon received FDA clearance for its Vistaseal applicators, developed with the Spanish plasma company Grifols, which spray a protein-based sealant to halt moderate bleeding during open or laparoscopic surgery.
With the deal off, the FTC has closed its investigation without issuing an official order.
“Now that the deal has been abandoned, patients and surgeons will continue to benefit from competition between these life-saving devices,” Simons said. The commission also noted that it had been cooperating closely with the European Union’s competition watchdog, which opened its own formal investigation late last month.
“In this concentrated space, we need to carefully assess whether the proposed merger would lead to reduced choice for surgeons and patients, to higher prices for our health services, or to slower development of alternative solutions to manage problematic bleeding,” Margrethe Vestager, the European Commission’s executive vice president in charge of competition policy, said at the time.
Meanwhile, J&J delivered its first-quarter financial results amid the COVID-19 epidemic, saying that its worldwide sales of medical devices declined by 8.2% to $5.93 billion—due to the widespread deferral of certain medical procedures, across its surgery, orthopedics, vision and interventional solutions businesses. But overall the company’s profits were up, as people stock up on medications.