Proposed Acquisition by iNova Pharmaceuticals (Singapore) Pte. Limited of Mundipharma’s Consumer Healthcare Business

Notifying Parties:

 iNova Pharmaceuticals (Singapore) Pte. Ltd.

Notifying Date: 

 8 September 2023

Summary of transaction:

(i)        the names of the merger parties;

iNova Pharmaceuticals (Singapore) Pte. Limited (“iNova”); and

Mundipharma’s consumer healthcare business in a number of countries, including Singapore (the “Target Business”).

(ii)       a description of the transaction;

The transaction involves a proposed acquisition by iNova of the Target Business (the “Proposed Transaction”).

(iii)      a description of the business activities of the merger parties worldwide and in Singapore;

iNova

iNova is a pharmaceutical company which develops, markets and sells a range of healthcare products, including prescription products and consumer healthcare products in over 20 countries. The product range includes products relating to weight management, coughs and colds, throat preparations, pain management, dermatology, cardiology, respiratory health, allergies and female health.

In Singapore, iNova offers a wide range of prescription medicines and consumer healthcare products, including throat preparations, cough, body care, weight management, pain management, respiratory health, cardiology and dermatology products under the (i) Difflam, (ii) Duro-Tuss, (iii) Dermaveen,  (iv) Duromine, (v) Contrave, (vi) Norgesic, (vii) Metsal, (viii) Nuellin, (ix) Tambocor, and (x) Aldara brands.

Target Business

The Target Business encompasses Mundipharma’s existing consumer healthcare business in a number of countries, including Singapore.

In Singapore, the Target Business offers cold and flu (including throat preparations), feminine wash and wound care products under its Betadine brand.

(iv)      a description of the overlapping goods or services, including brand names;

iNova submits that in Singapore, iNova and the Target Business overlap in the supply of throat preparation products under the Difflam and Betadine brand names respectively. iNova’s view is that throat preparations fall within the relevant market of cough, cold and flu products, and throat preparations (collectively referred to as, “CCFT products”), which are products that can be used to relieve and/or treat cold and flu type symptoms, including cough, nasal congestion, fever and sore throat, and which include multi-symptom cough, cold and flu products and dedicated analgesics. CCFT products are sold under the Difflam and Duro-tuss brand names for iNova and Betadine brand name for the Target Business.

(v)       a description of substitute goods or services;

iNova is of the view that from a demand-side perspective, the substitutes for iNova’s and the Target Business’ CCFT products would be multi-symptom cough, cold and flu products, throat preparations and dedicated analgesics offered by other competing suppliers (including both branded and generic products) across the various retail channels in Singapore.

iNova is of the view that from a supply-side perspective, supply-side substitution can come from other pharmaceutical companies switching their production to produce CCFT products.

(vi)      The applicant's views on:

a.         definition of the relevant market(s);

iNova submits that the relevant market for the purpose of this notification is the supply of CCFT products in Singapore.

b.         the way in which competition functions in this market;

iNova submits that the supply of CCFT products in Singapore is highly competitive, with multiple existing and potential competitors that can easily expand or enter to exert effective competitive restraints.

The important factors motivating a consumer’s purchasing decision in Singapore are therapeutic indication, price and brand positioning. In particular, for over-the-counter CCFT products, as these are usually displayed on the shelves of retailers, information on their prices and therapeutic indications are transparent and easily comparable for consumers to make a choice on which product to purchase. For CCFT products prescribed by physicians, consumers’ choice of the products is largely influenced by the physician’s recommendations. Physicians, in choosing which products to stock, will also largely have regard to the therapeutic indications, clinical evidence and prices of the products.

c.         barriers to entry and countervailing buyer power

Low barriers to entry and expansion

iNova is of the view that there are no material barriers to entry or expansion for the supply of CCFT products in Singapore. In particular, intellectual property rights and regulatory requirements do not pose a significant barrier.

Ease of switching and high countervailing buyer power

iNova is of the view that there are no significant switching costs for both intermediate customers (i.e. wholesale distributors and retail customers (i.e. retail chains, pharmacies, public healthcare groups, etc.)) and end customers across the various sales channels to switch between suppliers of CCFT products in Singapore. Additionally, the space is characterised by the presence of large and sophisticated intermediate customers with substantial countervailing buyer power. Intermediate customers generally multi-source and can also switch to other suppliers of CCFT products with minimal cost.

d.         the competitive effects of the merger (non-coordinated, coordinated and/or vertical effects, as relevant).

Non-coordinated effects

iNova submits that the Proposed Transaction will not give rise to non-coordinated effects for the following reasons:

a) the multitude of existing and potential competitors that can easily expand or enter to exert significant competitive pressure on the combined business of iNova and the Target Business;

b) the absence of material barriers to entry or expansion; and

c) the ability of intermediate customers and end customers to switch easily between different suppliers and the presence of large and sophisticated customers with substantial countervailing buyer power.

Coordinated effects

iNova submits that the Proposed Transaction will not give rise to coordinated effects for the following reasons:

a) the presence of numerous existing and potential competitors;

b) the ease of switching by customers; and

c) the low barriers to entry.

Vertical and conglomerate effects

iNova submits that the Proposed Transaction would not give rise to any vertical effects, as iNova and the Target Business do not supply or procure any products or services from each other.

iNova submits that the Proposed Transaction would also not give rise to any conglomerate effects as the Proposed Transaction does not add significantly to the product range that iNova and the Target Business each already offer to retail customers prior to the Proposed Transaction. Additionally, the general preference of retail customers is to stock a range of products across various brands and suppliers.

Decision:

Following its assessment, CCCS has concluded that the Proposed Transaction, if carried into effect, will not infringe the section 54 prohibition of the Competition Act 2004.

Decision Date: 5 December 2023

Read the Media Release.

Read the Grounds of Decision.