After Competition Commission of India, US fair trade watchdog FTC has asked Ranbaxy to divest one generic product as a condition for clearing its $4 billion deal with Sun Pharma to address monopoly concerns.
The merger deal, once consummated, would create India's largest and world's fifth-biggest drug maker.
To address monopoly concerns, the Federal Trade Commission (FTC) on Friday said Sun Pharmaceutical Industries and Ranbaxy Laboratories have agreed to divest the latter's interests in generic minocycline tablets.
Generic minocycline tablets are used to treat a wide array of bacterial infections, including pneumonia, acne, and urinary tract infections.
The latest development comes more than a month after its Indian counterpart CCI directed both companies to divest seven products as it found that the deal could hit competition in the Indian market.
According to FTC's complaint, the proposed merger would likely harm future competition by reducing the number of suppliers in the US markets for three dosage strengths (50 mg, 75 mg, and 100 mg) of generic minocycline tablets.
Ranbaxy is currently one of three suppliers of the products, while Sun is one of only a limited number of firms likely to sell generic minocycline tablets in the United States in near future.
Sun Pharma's entry would likely have resulted in significantly lowering prices for these drugs, it said.
Under the proposed settlement, Ranbaxy's generic minocycline capsule assets would be acquired by Torrent Pharmaceuticals that markets generic drugs in the US.
In addition, Sun and Ranbaxy must supply generic minocycline tablets and capsules to Torrent until the company establishes its own manufacturing infrastructure.
Sun Pharma, Ranbaxy and Torrent are leading pharmaceutical companies based in India.
FTC has appointed an interim monitor to ensure that Torrent receives the support it needs from Sun and Ranbaxy during the divestiture process.