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Does FTC attempt to block Amgen’s Horizon buy spell trouble for Pfizer-Seagen? Not necessarily, analysts say

News of the Federal Trade Commission (FTC) lawsuit challenging Amgen’s $28 billion buyout of Horizon prompted an immediate question: Will the U.S. antitrust enforcer also attempt to derail Pfizer’s plan to acquire Seagen for $43 billion?

Analysts at Berenberg Capital Markets say don’t automatically assume the Pfizer-Seagen deal will face the same hurdle.

They point to the FTC’s issue with Amgen’s deal being its potential ability to enhance the monopoly positions of Horizon’s thyroid eye disease drug Tepezza and gout medicine Krystexxa.

If Amgen ties lucrative rebates on its existing product portfolio to access to those Horizon medicines, the company could force payers and pharmacy benefit managers (PBMs) to accept higher prices, the FTC argues.

But as it applies to Pfizer-Seagen, Berenberg points out that there is little overlap between the companies’ therapies which would allow them to use the same bundling and rebate schemes. The analysts add that there also is little pipeline overlap between the companies that would draw the attention of antitrust lawyers.

Plus, Pfizer does not have Amgen’s history of pulling off volume-based bundle deals, Berenberg argues. The FTC has indicated that prior “bad acts” are included in merger reviews.

Regeneron CEO Len Schleifer hopped on the FTC bandwagon on Tuesday, claiming that drugmaker rebates have lessened competition in the industry.

“I’m glad the FTC is looking at this,” Schleifer said during The Financial Times’ U.S. pharma and biotech event in New York. “I think what goes on at the payer level is in some respects the worst thing for our industry and we’ve got to shine a brighter light on it.”

Amgen has said it will not bundle its drugs with Horizon’s meds. Assuming that the company will use the scheme is “entirely speculative,” Amgen added.

Regardless of whether the FTC will act similarly on Pfizer-Seagen, the move to block Amgen-Horizon is a chilling omen for the industry that will “dampen M&A enthusiasm across the biotech sector,” William Blair said in a note to investors earlier this week.

The FTC move is its first attempt to block a pharma M&A deal in more than a decade. In response on Tuesday, Seagen’s shares dropped 6%.

The action could lead Big Pharma companies to shy away from major deals and look for more speculative assets, analysts at Evercore ISI added.

“Thawing of interest in mega-deals would invariably shift consolidation focus to smaller and earlier-stage companies—and more of them,” Evercore wrote.