PCC approves Ayala Health’s acquisition of shares in regional pharma chain

May 27, 2019

The Philippine Competition Commission (PCC) has approved the acquisition by Ayala Healthcare Holdings, Inc. (AHHI) of shares in Negros Grace Pharmacy, Inc. (Negros Grace), after looking into how Ayala Group’s healthcare arm will affect the pharmaceutical retail market as its generics line will buy into a regional full-range drugstore chain.

The transaction involves the acquisition of shares by AHHI of 75 percent of the outstanding capital stock of Negros Grace from Jasminum Corp. (JC), while 25 percent will remain with JC.

After the transaction, the resulting capital structure of Negros Grace will have an authorized capital stock of P100,000,000 divided into 100,000,000 shares with a par value of P1.00 per share, an outstanding capital stock of P100,000,000.

AHHI of the Ayala Group is the corporate entity behind AC Health that owns generic pharmacy line Generika Drugstore, community-based clinic brand Family Doc, online pharmacy and delivery platform MedGrocer, medical records app Vigos and doctor-patient booking app Aide.

Negros Grace and its subsidiaries, Solomon Drug Corp. and Samuel Drug Corp., are companies in the pharmaceutical industry with strong regional presence in Central and Western Visayas with 70 drugstores.

Negros Grace drugstores sell mostly branded drugs, with a few generic drugs.

The review has looked into how transaction will affect consumers in the retail sale of pharmaceutical products market in the islands of Negros and Panay in the Visayas.

In a decision approved on May 23, PCC’s merger review found the transaction is not likely to lead to substantial lessening of competition in the relevant market since the merged firms do not have an incentive or the ability to increase its prices or reduce its product assortment.

PCC also noted post-transaction, sufficient number of retail players remain in the drugstore chain market in both the regional and national.

PCC, the country’s anti-trust body, is mandated under the Philippine Competition Act to review mergers and acquisitions to ensure that these deals will not harm the interest of consumers.

To date, PCC has received 184 merger transactions by local and international companies, approved 171 of them and blocked 1 anti-competitive merger.

The transactions have reached a combined worth of P2.86 trillion in terms of transaction value. DMS