Brussels (Alliance News) - The EU gave a green light Wednesday to a business swap between pharmaceutical giants Novartis and GlaxoSmithKline (GSK), but required the companies to give up some of their business to preserve competition.
Swiss medicine group Novartis is buying the cancer drug branch of British rival GSK for 16 billion dollars, while GSK will in turn acquire the vaccine operations of Novartis for 7.1 billion dollars.
The deals do not include Novartis' flu vaccine business, which the Swiss company plans to sell separately.
The two companies will also form a joint venture to create the world's largest firm for non-prescription drugs and healthcare products.
The deals, which were announced in April, come as expiring patents and pressure to cut costs have pushed global drug makers into streamlining their companies.
But the European Commission had concerns that the merger could affect competition and required concessions from the two companies.
To acquire GSK's cancer drug business, Novartis will have to divest two treatments used predominantly for skin cancer.
"The commission had concerns that the transaction would have reduced competition and innovation for these products," the EU's executive said in a statement. "These commitments address the identified competition concerns."
GSK will also have to release some of its business to acquire Novartis' vaccine operations and to control the new joint venture for non-prescription products.
The concessions cover vaccines for bacterial meningitis, diphtheria and tetanus, as well as products to curb smoking and to treat cold sores, the cold, the flu and pain.
"The commission had concerns that the transaction would have eliminated an important competitor to GSK for the supply of several vaccines and consumer health products, which might lead to price increases for European consumers," the EU institution said.
Glaxosmithkline (GSK)