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Ex-Post Assessment of Merger Effects: The Case of Pfizer and Pharmacia, 2003

39 Pages Posted: 1 Jun 2011  

Nina Leheyda

Centre for European Economic Research (ZEW)

Patrick Beschorner

Centre for European Economic Research (ZEW)

Kai Hüschelrath

Centre for European Economic Research (ZEW)

Date Written: 2011

Abstract

The paper studies the effects of the Pfizer and Pharmacia (2003) merger on competition in the Swiss pharmaceutical market and compares the assessment of the Swiss Competition Commission (COMCO) with the post-merger market developments. We find that the merger has had a miniscule impact on the Swiss pharmaceutical market. This has primarily to do with the fact that the product portfolios of both companies have shown no or only slight overlaps. In both cases of potential anticompetitive effects, the companies successfully proposed to divest some of their assets in order to prevent a further strengthening of their dominant position. The remedies included products in the development phase which were not available on the market at the time of the decision. In other markets in which either an overlapping of businesses of both companies existed or in which one of the merging entities held a dominant market position, no significant effects of the merger were noticed. This might have to do with both, existing price regulation in the Swiss drug industry and changes in Pfizer’s product portfolio following the merger. Furthermore, with respect to other potentially interesting market characteristics such as investment behaviour, R&D, sales or employment, available data on global company level does not allow an isolation of the possible effects of the merger.

Keywords: Mergers, ex-post evaluation, pharmaceutical markets

JEL Classification: K21, L42, L62

Suggested Citation

Leheyda, Nina and Beschorner, Patrick and Hüschelrath, Kai, Ex-Post Assessment of Merger Effects: The Case of Pfizer and Pharmacia, 2003 (2011). ZEW - Centre for European Economic Research Discussion Paper No. 11-035. Available at SSRN: https://ssrn.com/abstract=1852389 or http://dx.doi.org/10.2139/ssrn.1852389

Nina Leheyda (Contact Author)

Centre for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Patrick Beschorner

Centre for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Kai Hüschelrath

Centre for European Economic Research (ZEW)

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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