Mexico: Regulator may annul drug merger over financing trickery

Mexico’s Federal Commission for Economic Competition (COFECE) approved, in August of 2015, the sale of the country’s third-largest pharmaceutical supplier. The buyer, a little-known Dutch investment fund named Moench Cooperatif, paid US$83 million to acquire a controlling share of Casa Marzam. At the time, COFECE determined the sale would not affect competition in the sector.

Unknown to regulators was that Nadro SA – Marzam’s competitor and Mexico’s largest pharmaceutical distributor – was behind the Dutch fund, as revealed by a batch of documents leaked by Panama’s Mossack Fonseca law firm, in the wide-reaching ‘Panama Papers’ incident.

COFECE president Alejandra Palacios responded to the revelation, saying the agency “is now undertaking several actions meant to verify” the truth behind the claims made regarding the Marzam purchase. Mexico’s antitrust law allows COFECE to block the sale should it confirm Nadro’s involvement in acquiring its rival.

Nadro and Marzam together make up over 50% of Mexico’s pharmaceutical distribution sector, which covers an estimated 25,000 pharmacies and hundreds of private health clinics and hospitals.

Full Content: Wall Street Journal

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