Mankind Pharma Limited

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COMPETITION COMMISSION OF INDIA

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Combination Registration No. C-2024/08/1171

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1^st October 2024

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Notice under Section 6(2) of the Competition Act, 2002 given by Mankind Pharma

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Limited

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CORAM:

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Ms. Ravneet Kaur Chairperson Mr. Anil Agrawal Member Ms. Sweta Kakkad Member

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Mr. Deepak Anurag Member

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Order under Section 31(1) of the Competition Act, 2002

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On 7^th 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 25^th July 2024 executed between BSV, Mankind, Ansamira Limited, and Miransa Limited ( SPA 1 ) and a secondary Share Purchase Agreement dated 25^th July 2024 executed among BSV, Mankind, Mr. Bhasker Iyer, and Mr. Abhijit Mukherjee ( SPA 2 )¹ .

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1 Ansamira Limited, Miransa Limited, Mr. Bhasker Iyer and Mr. Abhijit Mukherjee are collectively the

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‘ Sellers ’.

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Combination Registration No. C-2024/08/1171

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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 21^st August 2024 ( RFI ), certain information and clarifications were sought from Mankind. Mankind submitted its response on 29^th August 2024 ( Response 1 ). As the Response 1 was found to be incomplete, another letter was issued to the Acquirer, on 9^th September 2024, in continuation of RFI, seeking requisite information and clarifications. The Acquirer submitted its response to the same on 18^th 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 20^th September 2024 ( Voluntary Submissions ).

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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.

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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.

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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.

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Combination Registration No. C-2024/08/1171

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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.

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Horizontal overlaps

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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.

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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

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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.

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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.

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Combination Registration No. C-2024/08/1171

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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.

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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.

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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:

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i. Calcium + Cholecalciferol (Solid) in India (Molecule level)

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ii. Mifepristone Market (Molecule level)

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iii. Calcium + Cholecalciferol (Liquid) in India (ATC4 code – A12A05)

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iv. Prasterone Market (ATC4 code – G03D06)

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v. Ambroxol Market (ATC4 code – R06A0U)

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vi. Other drugs for ED in India (ATC4 code – V03D02)

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4 As submitted, the ATC codes provided in the Horizontal FDF Markets are the primary ATC codes for the relevant FDFs based on data available on the IQVIA-IMS database. The IQVIA-India database adopts the EphMRA classification principles, however the classification is customized for India at the ATC3 and the ATC4 level as there are various molecules and combinations used in India that do not exist for other parts of the world (such as ayurvedic combinations).

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Combination Registration No. C-2024/08/1171

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vii. Other Nutrients in India (ATC4 code – V06D09) and

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viii. Antispasmodics and Anticholinergics Plain (ATC3 Code – A03B)

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These Horizontal FDF Markets are assessed hereunder.

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Calcium + Cholecalciferol (Solid) in India (Molecule level)

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In this market segment, market shares of Mankind and BSV are [10-15] per cent and [5-10] per cent, respectively. The combined market share of the Parties is [15-20] per cent. Further, there are other competitors in this market, viz, Corona Remedies which has a market share of [15-20] per cent, Alembic, USV India, and Dr. Reddy’s each of which has a market share of [10-15] per cent and are likely to continue to exert significant competitive constraint on the resulting entity. Therefore, the Proposed Combination is not likely to result in AAEC in this market segment.

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Mifepristone Market (Molecule level)

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In this market segment, market shares of Mankind and BSV are [5-10] per cent and [20-25] per cent, respectively. The combined market share of the Parties is [30-35] per cent. This market segment is led by Akumentis Health with market share in the range of [40-45] percent while Integrace Health is another competitor with market share in the range of [10-15] percent. Further, as observed, the share of Mankind has come down to [5-10] percent in FY 2023-24 from [10-15] percent in FY 2019-20 while BSV’s share has increased from [10-15] percent to [20-25] percent. Even Integrace has lost market share and its market share has come down to [10-15] percent from [25-30] percent over the same period. On the other hand, Akumentis Health has gained significantly from [25-30] percent to [40-45] percent over the same period. Thus, on an overall basis, Akumentis Health appears to be a significant competitor in its own right and the market is likely to remain competitive with the presence of other market players such as Integrace as well. Therefore, the Proposed Combination is not likely to result in AAEC in this market segment.

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Combination Registration No. C-2024/08/1171

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Calcium + Cholecalciferol (Liquid) in India (ATC4 code – A12A05)

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In this market segment, market shares of both Mankind and BSV are in the range of [5-10] per cent each and the combined market share of the Parties is in the range of [15-20] per cent which is at worst moderate, and the increment is also not highly significant. This market segment is led by Meyer Organics with market share in the range of [35-40] percent while GlaxoSmithKline is another competitor with market share in the range of [10-15] percent. Thus, the Proposed Combination is not likely to alter the competition dynamics in this market segment in a significant manner considering the presence of the Parties and the overall market structure and accordingly the Proposed Combination is not likely to result in AAEC in this market segment.

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Prasterone Market (ATC4 code – G03D06)

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In this market segment, market shares of Mankind and BSV are in the range of [10-15] per cent and [5-10] percent respectively and the combined market share of the Parties is in the range of [15-20] per cent. This market segment is led by Alembic with market share in the range of [40-45] percent while Akumentis Health is another competitor with market share in the range of [10-15] percent. Considering the change in market landscape since FY 2019-20 to FY 2023-24, it is further observed that BSV has lost significantly in this segment with its market share decreasing from a high of [20-25] percent to the present [5-10] percent. Though Mankind has gained in FY 2023-24 as compared to FY 2022-23 with share increasing from [0-5] percent to [10-15] percent, Alembic’s share has been consistently more than 40 percent. Accordingly, considering the presence of the Parties and the overall market structure, the Proposed Combination is not likely to alter the competition dynamics in this market segment in an adverse manner.

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Ambroxol Market (ATC4 code – R06A0U)

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In this market segment, market shares of Mankind and BSV are in the range of [25-30] per cent and [5-10] percent respectively and the combined market share of the Parties is in the

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range of [30-35] per cent. The other competitors of the Parties in this segment include Eris Lifesciences and Intas Pharma, each having [15-20] percent market share, Zydus, Macleods, and Fourrts, each having [5-10] percent market share. Considering the change in market landscape since FY 2019-20 to FY 2023-24, it is observed that both Mankind and BSV have lost market shares with Mankind’s market share decreasing from [30-35] percent to the present [25-30] percent and BSV’s share decreasing from [10-15] percent to [5-10] percent. Correspondingly, Eris, Intas, and Zydus have gained market share over the same period. Considering the presence of the Parties and the market landscape, the segment appears competitive, and the Proposed Combination is not likely to alter the competition dynamics in this market segment in an adverse manner.

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Other drugs for ED in India (ATC4 code – V03D02)

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In this relevant market, market shares of both Mankind and BSV are in the range of [5-10] per cent each and the combined market share of the Parties is in the range of [15-20] per cent. This market segment is led by Himalaya with market share in the range of [40-45] percent while Macleods Pharma, Sun Pharma, and Celon Labs are other competitors, each having market share in the range of [5-10] percent. Further, the products offered by the Parties differ in galenic form with products of Mankind being topical while that of BSV being in the form of oral tablets which is indicative of the Parties not being close competitors in this segment. Considering the aforesaid, the Proposed Combination is not likely to alter the competition dynamics in this market segment in an adverse manner.

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Other Nutrients in India (ATC4 code – V06D09)

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The Commission observed that the ATC 4 classification for ‘other nutrients’ includes products with different galenic forms viz. , parenteral, and oral and thus is not very representative of the competition dynamics. Accordingly, the Commission considered assessment in terms of galenic form, and the overlaps were narrowed down to ‘other nutrients – oral liquids’. In this segment, Mankind is a market leader with share in the range of [3540] percent and BSV’s share ranges between [5-10] percent thus leading to a combined

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market share of [45-50] percent. However, this is a heterogeneous category which includes various FDFs which have L-Arginine and other active ingredients. As observed, even the products of Mankind and BSV are differentiated. Accordingly, the market shares of the segment even narrowed down by galenic forms do not appear to be representing the market competition dynamics. Considering the nature of this classification and characteristics of products of Mankind and BSV, the Proposed Combination is not likely to alter the competition dynamics in this market segment in an adverse manner.

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Antispasmodics and Anticholinergics Plain (ATC3 Code – A03B)

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The overlaps between the activities of the Parties in this segment are observed in the parenteral form. In this relevant market, market share of Mankind is in the range of [5-10] per cent while that of BSV is in the range of [15-20] percent and the combined market share of the Parties is in the range of [20-25] per cent. The market segments appear competitive with presence of competitors viz. , Martin Harris [20-25] percent, Sanofi [15-20] percent, Abbot [10-15] percent, and Neon labs [5-10] percent among others. Considering the market landscape, the segment appears competitive, and the Proposed Combination is not likely to alter the competition dynamics in this market segment in an adverse manner.

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Complementary/Vertical linkages

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Apart from the FDFs, Mankind and BSV are present in different stages of pharmaceutical supply chain at the broader level viz. , intermediates, APIs, excipients, CMO operations, and pharmaceutical packaging. Accordingly, the Commission considered the nature and extent of presence of the Parties in each of these segments for determining whether any detailed examination is required for assessing the impact of the Proposed Combination on competition in any of the plausibly affected markets.

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The Commission noted that Mankind is engaged in the sale of excipients in India. However, its presence is primarily captive with negligible sales to third parties. As regards APIs/intermediates, none of the APIs/intermediates manufactured and sold by Mankind

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Combination Registration No. C-2024/08/1171

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(including through its affiliates) in India are used by BSV as an input for manufacture and sale of any of its products. Accordingly, considering the aforesaid presence of Mankind, the Proposed Combination is not likely to result in any vertical linkages capable of impacting the competition dynamics.

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The activities of Mankind and BSV create potential vertical linkages considering each of the upstream activities of pharmaceutical CMO services and packaging materials for pharmaceutical products in India with the downstream activity of manufacture and sale of FDFs in India. The Commission noted that a majority of the CMO services provided by Mankind are on a captive basis to other Mankind group affiliates only. The market share of Mankind in the market for the provision of CMO in India (considering sales made to third parties) is estimated to be less than 5 percent, which is insignificant to cause any change in competition dynamics. Similarly, the market share of Mankind in the upstream segment of manufacture and sale of packaging materials for pharmaceutical products is less than 5 percent, which is also insignificant. The insignificant presence of Mankind in the aforesaid upstream market segments considered together with the insignificant overall presence of the Parties in the downstream segment of manufacture and sale of FDFs further reinforces the lack of likelihood of the Proposed Combination conferring the resulting entity with any ability or incentives to engage in any of the foreclosure strategies.

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Considering the material on record including the details provided in the Notice and the assessment of the Proposed Combination based on the factors stated in Section 20(4) of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have appreciable adverse effect on competition in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act.

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This order shall stand revoked if, at any time, the information provided by the Acquirer is found to be incorrect.

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The information provided by the Acquirer shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act.

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The Secretary is directed to communicate to the Acquirer accordingly.

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Mankind Pharma Limited

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Mankind Pharma Limited

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