Teva’s acquisition of Allergan’s generic pharmaceuticals business

Position Statement

See the news release that corresponds to this position statement.

OTTAWA, April 18, 2016 — This statement summarizes the approach taken by the Competition Bureau in its review of the proposed transaction between Teva Pharmaceutical Industries Ltd. (Teva) and Allergan plc (Allergan) pursuant to a purchase agreement announced on July 27, 2015 related to the acquisition of Allergan’s generic pharmaceutical business.Footnote 1

The Bureau announced on April 4, 2016 that it had reached a consent agreement with Teva, which resolves the competition concerns related to the transaction. Following its review, the Bureau concluded that Teva’s acquisition of Allergan’s generic pharmaceutical business would likely have resulted in a substantial lessening or prevention of competition for the sale of two pharmaceutical products in Canada due to the elimination of future competition between the parties.

On this page


Teva and Allergan are suppliers of pharmaceutical products in Canada and globally. Teva specializes primarily in generic drugs, and Allergan has a large portfolio of both branded and generic pharmaceuticals. These products include both prescription and over‑the‑counter medications in finished dose form (i.e., drugs in final form marketed for use).

The Bureau’s review focused on whether the transaction was likely to substantially lessen competition in markets where both parties are current suppliers or, in the case where either Teva or Allergan has a product in development for sale in Canada, substantially prevent future competition. The Bureau took into consideration, among other factors, the extent to which effective competitors would remain in the relevant markets after the transaction, and the likelihood of timely entry by other potential suppliers.

In conducting its review, the Bureau cooperated with a number of its international counterparts, including the United States Federal Trade Commission and the European Commission. The Bureau also conducted interviews with numerous stakeholders, including provincial drug formularies, group purchasing organizations, and competitors.


Relevant markets

The overlap between Teva and the Allergan business it proposes to acquire relates to portions of their respective portfolios of generic prescription drugs. Generics are determined by Health Canada to be bioequivalent to a brand/reference drug, meaning they contain the same medicinal ingredients and have the same pharmacological effects as their branded counterparts. Generics can be approved for sale in Canada by Health Canada once the patent or exclusivity period of the corresponding branded drug has expired or been successfully challenged. Generics play a significant role in reducing the price of drugs in Canada. Provincial drug formularies and private drug plans employ automatic substitution rules that result in consumers being supplied with the lower-priced generic equivalents of drugs prescribed by their doctors, unless the doctor specifies that such substitution should not occur.

Consistent with recent pharmaceutical reviews involving generic drugs, the Bureau found that the parties’ products should generally be considered within the same relevant product market where they contain the same molecule or active ingredient and are supplied in the same format. In some instances, it was appropriate to differentiate products based on other factors, such as differences in dosage strength.

The relevant geographic market for the supply of finished dose pharmaceutical products is no broader than Canada. Significant regulatory barriers limit the entry of pharmaceutical products from outside of Canada.

Effective remaining competition

For each relevant market, the Bureau considered whether there were sufficient alternatives to products of the merging parties that constitute effective remaining competition. This analysis consisted primarily of identifying remaining suppliers of equivalent generics to the parties, and any likely future generic suppliers. The Bureau also considered whether the branded drug remained in the market following the entry of generics, as well as the brand’s market share relative to the generics.

When assessing potential future suppliers, the Bureau considered factors such as the likelihood, timeliness and effectiveness of entry. Where a drug in development has been approved for sale by Health Canada (i.e., received a Notice of Compliance), this information is publicly available. However, until such approval has been granted, the information on the status of drug development, including whether approval has been sought from Health Canada and the status of Health Canada’s approval process, is confidential. Therefore, in those relevant markets where the Bureau required information to assess future entry where Health Canada approval had not yet been granted, the Bureau relied heavily on information obtained directly from competing drug developers on the status of their drug approval processes and anticipated timing for entry. The Bureau also assessed whether these other developers were likely to be effective competitors by considering factors such as breadth of portfolio, existing sales volumes and customer relationships, and experience obtaining the required regulatory approvals. The Bureau also coordinated extensively with Health Canada, in accordance with our respective confidentiality policies.

Consistent with previous reviews in the pharmaceutical industry, market contacts stated that the entry of the first, second and third generic competitor into a market frequently resulted in lower prices. This is in part a result of regulations that effectively cap the prices of generic drugs, with the prices lowering with the entry of each of the first three generic suppliers.


The Bureau identified two products where it concluded the transaction would substantially lessen or prevent competition: tobramycin inhalation solution and buprenorphine/naloxone tablets.

Tobramycin inhalation solution is used for the management of cystic fibrosis in patients with certain chronic pulmonary infections. Teva recently launched a generic version of this product in early 2016, and Allergan is also developing the product. One other potential generic supplier had received Health Canada approval, but the Bureau did not identify a sufficient number of future suppliers that would likely entere the market and become effective competitors in a timely manner. Tobramycin is also available in other formats, including ophthalmic solution, ophthalmic ointment, and injection. The Bureau found that the inhalation solution represented a distinct product market. Healthcare professionals often decide on the most suitable drug format for a particular patient. Further, generics are generally priced with reference to the historical branded drug price in the same format and dosage strength. Accordingly, the Bureau concluded that the transaction would likely result in a substantial prevention of competition in the supply of tobramycin inhalation solution.

Buprenorphine/naloxone is a tablet used for substitution treatment in adult opioid drug dependence. Teva is a supplier of a generic version of this drug, as is one other generic supplier. Allergan is developing this drug. Allergan was the only other developer identified as likely to enter in a timely manner, and would therefore have been the third generic supplier. The Bureau concluded that the transaction would likely result in a substantial prevention of competition in the supply of buprenorphine/naloxone tablets.


Teva has entered into a registered consent agreement with the Bureau, the terms of which require Teva to divest either its own or Allergan’s Canadian assets relating to tobramycin inhalation solution and buprenorphine/naloxone tablets. The consent agreement specifies that Teva will determine for each product whether it will sell its own or Allergan’s assets prior to the completion of the sale. Pursuant to the consent agreement, these products must be sold to buyer(s) approved by the Commissioner of Competition. The Bureau is confident that the implementation of the consent agreement will adequately resolve its concerns arising from the merger with respect to these two products.

The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.

This publication is not a legal document. The Bureau’s findings, as reflected in this Position Statement, are not findings of fact or law that have been tested before a tribunal or court. Further, the contents of this Position Statement do not indicate findings of unlawful conduct by any party.

However, in an effort to further enhance its communication and transparency with stakeholders, the Bureau may publicly communicate the results of certain investigations, inquiries and merger reviews by way of a Position Statement. In the case of a merger review, Position Statements briefly describe the Bureau's analysis of a particular proposed transaction and summarize its main findings. The Bureau also publishes Position Statements summarizing the results of certain investigations, inquiries and reviews conducted under the Competition Act. Readers should exercise caution in interpreting the Bureau’s assessment. Enforcement decisions are made on a case‑by‑case basis and the conclusions discussed in the Position Statement are specific to the present matter and are not binding on the Commissioner of Competition.

For media enquiries:
Media Relations

For general enquiries:
Stay connected