The European Commission has accused Indian pharmaceutical company Alchem International of participating in a cartel to fix the prices of a key pharmaceutical ingredient, a move that could result in significant financial penalties for the company.
The Commission, acting as the European Union’s competition watchdog, has issued a statement of objections to Alchem, detailing its charges. The Commission suspects Alchem of violating EU antitrust rules by colluding with other drug manufacturers to fix prices and allocate quotas for N-Butylbromide Scopolamine/Hyoscine (SNBB), an essential ingredient used in the production of the abdominal antispasmodic drug Buscopan and its generic versions. This ingredient is crucial for the treatment of various gastrointestinal disorders.
Margrethe Vestager, the European Commission’s Executive Vice President for Competition Policy, stated that Alchem’s alleged involvement in this cartel may have restricted European consumers’ access to affordable medications. Vestager highlighted that the cartel’s actions potentially harmed consumers by keeping prices artificially high and limiting supply.
The investigation into Alchem is part of a broader crackdown on anti-competitive practices within the pharmaceutical industry by the European Commission. In October 2023, the Commission fined several other companies, including Alkaloids of Australia, Alkaloids Corporation, Transo-Pharm, Linnea, and Boehringer, a total of 13.4 million euros (approximately $14.5 million) for their participation in the same cartel. C2 PHARMA, another company involved, avoided fines by alerting the regulators to the cartel under the EU’s leniency program.
Alchem, based in India with operations in Switzerland, has yet to respond to the allegations. The company has the opportunity to review the Commission’s documents and request an oral hearing to present its defense. Should the Commission find Alchem guilty of the charges after considering their defense, the company could face a fine of up to 10% of its global annual turnover.
The European Commission’s heightened vigilance in the pharmaceutical sector has seen several significant actions in recent months. In April 2024, the Commission concluded an investigation into CSL Vifor, resulting in the company agreeing to a comprehensive communication effort to counteract a misinformation campaign against a competitor’s drug. In July 2023, the Commission imposed its largest-ever fine under merger regulations, penalizing DNA sequencing giant Illumina $476 million for proceeding with the acquisition of cancer detection biotech Grail before the completion of an antitrust review.
The European Commission’s actions underscore its commitment to maintaining competitive markets in the pharmaceutical industry, ensuring that companies do not engage in practices that harm consumers through price fixing and restricted access to essential medications. The outcome of the investigation into Alchem will be closely watched as a significant indicator of the Commission’s continued efforts to regulate and enforce fair competition practices within the sector.
