Mankind Pharma Limited

Page 1 of 10 COMPETITION COMMISSION OF INDIA Combination Registration No. C-2024/08/1171 1st October 2024 Notice under Section 6(2) of the Competition Act, 2002 given by Mankind Pharma Limited CORAM: Ms. Ravneet Kaur Chairperson Mr. Anil Agrawal Member Ms. Sweta Kakkad Member Mr. Deepak Anurag Member Order under Section 31(1) of the Competition Act, 2002 1. On 7th August 2024, the Competition Commission of India (Commission) received a notice under Section 6(2) of the Competition Act, 2002 (Act), given by Mankind Pharma Limited (Mankind/Acquirer) for proposed acquisition of 100 percent shareholding of Bharat Serums and Vaccines Limited (BSV/Target) by way of secondary purchase from the existing shareholders of BSV (Proposed Combination). For the purposes of the Proposed Combination, a Share Purchase Agreement dated 25th July 2024 executed between BSV, Mankind, Ansamira Limited, and Miransa Limited (SPA 1) and a secondary Share Purchase Agreement dated 25th July 2024 executed among BSV, Mankind, Mr. Bhasker Iyer, and Mr. Abhijit Mukherjee (SPA 2)1. 1 Ansamira Limited, Miransa Limited, Mr. Bhasker Iyer and Mr. Abhijit Mukherjee are collectively the ‘Sellers’. Combination Registration No. C-2024/08/1171 Page 2 of 10 2. In terms of Regulation 14(3) of the Competition Commission of India (Procedure in regard to the transaction of business related to combinations) Regulations, 2011 (Combination Regulations), vide letter dated 21st August 2024 (RFI), certain information and clarifications were sought from Mankind. Mankind submitted its response on 29th August 2024 (Response 1). As the Response 1 was found to be incomplete, another letter was issued to the Acquirer, on 9th September 2024, in continuation of RFI, seeking requisite information and clarifications. The Acquirer submitted its response to the same on 18th September 2024 after seeking extension of time (Response 2) [Response 1 and Response 2 collectively constitute ‘Response to RFI’]. The Response to RFI was also followed by additional voluntary submissions on 20th September 2024 (Voluntary Submissions). 3. Mankind is a public listed company and is engaged in developing, manufacturing, and marketing a diverse range of pharmaceutical finished dosage formulations (FDFs) across various acute and chronic therapeutic areas, as well as several consumer healthcare products such as condoms, emergency contraceptives, pregnancy tests, vitamins, minerals, nutrients (VMNs), antacids and anti-acne preparations segments. Through its subsidiaries, Mankind is also engaged in, inter alia, the manufacture and sale of active pharmaceutical ingredients (APIs), pharmaceutical intermediates, and packaging products for pharmaceutical products. 4. BSV, along with its subsidiaries, is engaged in research, development, licensing, manufacturing, importing, exporting, marketing, and distribution of: (a) pharmaceutical formulations/FDFs and/or APIs; (b) biotech and biological formulations and/or APIs; (c) food and health supplements; (d) medical devices; and (e) ayurvedic medicines; in each case, in the therapeutic areas such as gynaecology, in-vitro fertilisation (IUI-IVF), critical care and/or emergency medicines for human use. 5. The Acquirer and the Target are both engaged in activities forming part of pharmaceutical market. The supply chain in the pharmaceutical sector commences with the manufacture of pharmaceutical intermediates, which serve as the building blocks for APIs. Thereafter, the next step in the supply chain is the manufacture of APIs which are the primary molecules used in the manufacture of FDFs (apart from excipients), which are sold to end consumers. Combination Registration No. C-2024/08/1171 Page 3 of 10 Manufacturing of the final FDF may either be undertaken directly by the pharmaceutical company, or outsourced to contract manufacturers (i.e., pharmaceutical CMO services2). Another plausible linkage in the pharmaceutical supply chain can be introduced in form of packaging materials needed for packaging of pharmaceutical products. In the backdrop of the aforesaid supply chain, the Commission examined the resulting horizontal overlaps and vertical/complementary linkages between Mankind and BSV. Horizontal overlaps 6. The Commission noted that the primary area of horizontal overlaps between the activities of Mankind and BSV is manufacturing and supply of FDFs. FDFs are the consumable form of medicines which can be consumed by/ administered to end-consumers. To cater to different medical conditions of the patient and depending on other factors, FDFs are manufactured and sold in various forms of administration, such as, FDFs which can be administered (i) orally (in the form of tablets, pellets, capsules, powder for solutions, microspheres), (ii) topically (such as, patches, ointments, creams, drops, etc.), (iii) injectables (such as ampoules, syringes/injections and vials), or as (iv) inhalers. 7. For the purposes of competition assessment, FDF classifications are considered based on the Anatomical Therapeutic Chemical (ATC) classification for medicines3. It was submitted that all the FDFs classified at ATC3/ATC4 levels are characterized by a high degree of substitutability, from an end-use perspective and that save for the rare case of side-effects, all FDFs within a particular ATC3/ATC4 classification have the same user experience (regardless of any difference in the underlying molecule used). However, the Commission is 2 Similar to CMO services, there are Contract development and manufacture organization (CDMO) services which include development and manufacturing services on a contractual basis for pharmaceutical companies. Further, CDMO/CMO services can be segmented on the basis of the stage of the pharmaceutical supply chain i.e., CDMO services for APIs, and CDMO services for FDFs. 3 The ATC system is a drug classification system that classifies the active ingredients of drugs according to the organ or system on which they act and their therapeutic, pharmacological, and chemical properties. The EphMRA ATC classification system is a hierarchical and coded four level system. The first level (ATC 1) is the broadest and the most general whereas the fourth level (ATC4) is the narrowest and most detailed. In the ATC1 level, medicinal products are divided into 16 main anatomical groups. The second level (ATC2 level) is either a pharmacological or therapeutic group. The third and fourth levels (ATC3 and ATC4 level respectively) are chemical, therapeutic or pharmacological subgroups. Combination Registration No. C-2024/08/1171 Page 4 of 10 of the opinion that the comprehensive assessment entails assessment at the molecule level followed by ATC3/ATC4 therapeutic groups. Accordingly, the assessment was undertaken considering the presence of Mankind and BSV in FDFs classified at the molecule level and ATC3/ATC4 therapeutic groups. 8. Based on the information provided by Mankind, horizontal overlaps were identified between the business activities of Mankind and BSV in the relevant markets for 31 FDF therapeutic segments at the molecule level, 43 FDF therapeutic segments at ATC 3 classification codes level, and 60 FDF therapeutic segments at an ATC 4 classification codes level (collectively referred to as the ‘Horizontal FDF Markets’)4. With the aforesaid segments as base frame of reference, the Commission further factored differences in galenic forms in its assessment. Further, wherever considered appropriate, the Commission also took note of dosage level bifurcation of each of the overlapping Horizontal FDF Markets. However, as the Proposed Combination is not likely to result in appreciable adverse effect on competition (AAEC), for the reasons detailed in ensuing paragraphs, irrespective of the manner in which the relevant market is delineated, the Commission decides to leave precise delineation of the relevant market(s) open. 9. On the basis of combined market shares (exceeding 15 percent) and incremental market share (exceeding 5 percent) as a result of the Proposed Combination, the Commission narrowed the area of assessment to the following Horizontal FDF Markets: i. Calcium + Cholecalciferol (Solid) in India (Molecule level) ii. Mifepristone Market (Molecule level) iii. Calcium + Cholecalciferol (Liquid) in India (ATC4 code – A12A05) iv. Prasterone Market (ATC4 code – G03D06) v. Ambroxol Market (ATC4 code – R06A0U) vi. Other drugs for ED in India (ATC4 code – V03D02)