Pfizer Inc. (NYSE:PFE) was cleared of anti-competition claims leveled against it by Australia’s competition regulator ACCC. The drug maker was blamed for stifling competition for the generic version of its cholesterol drug Lipitor in the Australian market by promoting unlawful deals with pharmacies. However, the federal court in Australia dismissed the claims against Pfizer, a move that certainly left ACCC with a bitter taste in the month. It is not clear whether ACCC would seek the opinion of higher a higher court on the matter.
The court determined that Pfizer Inc. (NYSE:PFE) didn’t abuse its market power to frustrate competition in the market following the expiration of Lipitor patent. ACCC claimed that Pfizer used a number of strategies such as direct supplies to pharmacies and attractive discounts to cut off competition for the generic version of Lipitor, a multi-billion dollar drug.
According to the court, Pfizer neither promoted unlawful deals nor abused its market dominance.
Efforts to lessen competition unlawfully
The patent protection for Lipitor expired in May 2012. Pfizer was the sole supplier of the cholesterol drug in Australia while the patent existed. However, according to ACCC, Pfizer embarked on efforts to protect its market share even before the patent expiration. The regulator alleged that Pfizer’s behavior to lessen competition for generic versions of Lipitor led to various violations.
However, the court disagreed with ACCC over its accusations of Pfizer Inc. (NYSE:PFE) and handed the U.S. drug giant a much-needed victory. ACCC may or may not seek legal redress elsewhere over the matter.
Pfizer Inc. (NYSE:PFE) is facing patent expiration of blockbuster drugs, a development that has adversely impacted the company’s top-line numbers. Lipitor brought in $12 a year in sales, competition has greatly eroded Lipitor revenue. Pfizer recently moved to cut its research and development spending to preserve cash amid declining revenue.
However, the cut in research budget could also hamper efforts to develop new blockbuster drugs to boost revenue.
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of USmarketsDaily.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: