Microeconomics
April 14, 2015
The Merge between Watson Pharmaceutical and Arrow
When two firms or companies reach an agreement to combine together
is called merge. When one company buys out another company is called an
acquisition. There are a variety reasons for either of the two and both are a
concern to the public and to policy makers. Mergers are known to have an
impact on market concentration and on the welfare of the public. Mergers
and acquisitions are voluntary and they are conducted by mutual agreement.
In December 2009 The Federal Trade Commission announced that Watson
Pharmaceutical Inc. proposed a $1.7 billion acquisition against rival generic
drug company Arrow Pharmaceutical owners by Robin Hood Holdings
Limited. Watson alleged that the transaction would substantially reduce
competition in the U.S. markets for important generic drug Cabergoline used
to treat Parkinson's disease and generic drug Dronabinol used to treat side
effects from chemotherapy. For the commission to be satisfied, the two
companies will need to sell some of the things associated with the drugs
to certain buyers to make sure of continued competition in the market.
Watson Pharmaceutical Inc. is an integrated global specialty
pharmaceutical company. Their primary purpose is to develop, manufacturer,
market, and distribute generic, brand, and bio-similar products. Watson has
one of the widest product offerings of generic drugs in the United States, they
are known to provide excellent customer service, and they have earned a
reputation to provide cheap, reasonable, quality pharmaceutical products.
Based on total prescriptions filled, Watson is one of the largest
pharmaceutical manufacturer in the U.S. Their main products are easily
replicable generic drugs. In 2009 Watson earned around $2 billion in revenue
and $2 million in net income.
Arrow Pharmaceutical owned by Robin Hood...