Antitrust Life Sciences Quarterly Update 2025 Q1

While M&A activity slowed in the first quarter of 2025, including in life sciences, there have been plenty of noteworthy developments in the antitrust space in the first 100 days of the Trump administration. The Federal Trade Commission (FTC) under new Chairman Andrew Ferguson has already launched its first merger challenge while also signaling a more deal-friendly approach by reinstituting the “early termination” process, whereby the FTC uses its discretion to terminate a Hart-Scott-Rodino (HSR) review prior to the expiration of the statutory review period in instances in which the transaction does not present any competitive issues.

Whether or not it is indicative of a more permissive approach to life sciences merger enforcement, the obesity therapeutics space remains a hotbed of M&A activity. While a variety of players have aggressively expanded their weight-loss drug portfolios through acquisitions, licensing agreements, and partnerships, these deals have thus far avoided significant antitrust agency scrutiny. This remains an area to watch, as a long list of sponsors strive to improve on (and compete with) the blockbuster Wegovy and Zepbound franchises through a multitude of Mechanisms of Action and combinations.

In the litigation realm, exclusive dealing claims remain a focus of plaintiffs, with increasing scrutiny of contracting strategies involving pharmacy benefit managers (PBMs). These claims have gained momentum in recent years as PBMs have become increasingly vertically integrated with health insurers. A recent summary judgment decision in the Regeneron v. Amgen antitrust lawsuit highlights a growing litigation trend involving rebate bundling and alleged formulary exclusivity agreements with PBMs.

On the government enforcement front, California continues to remain a key battleground state for life sciences antitrust litigation, with a ruling striking down California’s controversial “pay for delay” statute targeting patent settlements and a new proposed bill seeking to add civil antitrust penalties for violations of California’s Cartwright Act.

I. FTC Moves to Block Merger of Top Two Providers of Hydrophilic Coatings

In the first merger challenge under new leadership, the FTC in March filed a complaint to block GTCR BC Holdings, LLC’s (GTCR) acquisition of Surmodics, Inc., a manufacturer of coatings for medical devices. GTCR drew the FTC’s attention because it had acquired another rival coating manufacturer, Biocoat Holdings LLC, in 2022. The FTC alleges that the merger combines the #1 and #2 players in a market for outsourced hydrophilic coatings.

Hydrophilic coatings, applied to a medical device by either UV curing (using light) or thermal curing (using heat), are crucial for the safety and effectiveness of interventional medical devices that must move through the human body with minimal friction, such as stents and catheters. It appears that the outcome of the case will turn on market definition. According to the FTC, even though hydrophilic coatings fall into two distinct categories — those coated by UV light versus those cured by thermal heating — both are generally effective for the vast majority of medical devices and so UV-cured and thermal-cured coatings should be part of a single market.

In answering the complaint, the parties have taken issue with the FTC’s market definition, both for what it includes and what it does not. In the first instance, the parties contend that thermally-cured coatings (GTCR’s legacy product) and UV-cured coatings (Surmodics’ product) do not in fact compete head-to-head because they rarely work equally well for a given medical device. The parties also take issue with what’s not in the FTC’s proposed market, specifically alternative methods such as hydrophobic coatings. To the extent the FTC’s market is large enough to accommodate both thermally-cured coatings and UV-cured coatings, the parties argue that it must also include these products as well.

Perhaps the most notable aspect of the complaint is its exclusive reliance on traditional theories of antitrust harm measured by well-established metrics such as HHI thresholds, an apparent departure from the FTC’s approach under former Chair Lina Khan that often pursued novel theories of harm in litigation.

Medical devices have traditionally been one of the more active areas of FTC enforcement. Its experience with this sector stretches back decades, and the Commission and Staff, and in particular Mergers I, are well-versed in the products and industry players. This has often allowed it to quickly process and clear transactions without any (or only minimal) substantive issues. And although a few medical device deals resulted in litigation (e.g., Illumina/Grail), the majority of problematic transactions were resolved via consent decree, a fact that serial acquirers such as Medtronic, Boston Scientific, and Johnson & Johnson likely baked into their own deal considerations. With remedies seemingly no longer in the agencies’ doghouse (as was the case under Khan and Kanter), it is reasonable to expect that most deals presenting substantive issues will be resolvable through consent decrees.

II. Obesity Drugs Remain a Hot Market

While M&A activity is down across the board, the market for obesity assets continues to grow. Large players are seeking to acquire prospective assets to try to outmaneuver early winners such as Novo Nordisk and Eli Lilly, who are enjoying massive sales through their respective GLP-1-based therapies, Wegovy and Zepbound.

On March 3, 2025, AbbVie Inc. announced a licensing agreement with Gubra A/S, a Danish preclinical CRO and biotech company, for the development of Gubra’s asset GUB014295, a long-acting amylin analog for treating obesity. GUB014295 activates amylin and calcitonin receptors. Amylin is a satiety hormone identified as a therapeutic target for obesity because of its ability to activate signals to the brain that suppress appetite and can reduce food intake. GUB014295 is in a Phase 1 clinical trial.

Per the agreement, Gubra will receive $350 million up front and will be eligible to receive up to $1.875 billion in development, commercial, and sales milestone payments. AbbVie will lead development and commercialization of GUB014295 globally.

Notably, the FTC cleared this transaction under its “early termination” program. The FTC had suspended early termination in February 2021 when confronted with an unprecedented volume of HSR merger control filings during the height of the COVID-19 pandemic but reinstated it effective in January of this year. The AbbVie/Gubra license agreement was one of the first transactions to receive early termination since its return, a welcome sign to pharmaceutical dealmakers hopeful to see quick clearance for low-risk transactions.

Elsewhere in the obesity market, Novo Nordisk signed two licensing agreements in less than one week this March. First, it signed with United Laboratories, a Chinese company, to secure rights to United Labs’ “triple agonist” weight-loss drug candidate UBT-251. Later that week, Novo signed a licensing deal with Lexicon Pharmaceuticals for rights to develop its LX-9851 asset targeting the ACSL5 enzyme.

Merck & Co. signed an exclusive licensing deal with China’s Hansoh Pharmaceutical for an oral GLP-1 candidate (HS-10535). The deal is worth up to $2.0 billion ($112 million up front, the rest in milestones). Merck will develop and commercialize the drug globally. Hansoh will retain control of HS-10535 in China, where it can choose to co-promote or solely commercialize the product. Industry observers have noted that Merck lags behind other pharmaceutical companies in the race to obtain obesity assets.

Finally, on March 12, 2025, healthcare giant F. Hoffmann-La Roche AG announced a collaboration and licensing agreement with Zealand Pharma to develop and co-commercialize petrelintide. Petrlintide is Zealand’s long-acting amylin analog drug. The parties will pursue petrelintide as both a stand-alone therapy and a fixed-dose combination with Roche’s lead incretin asset, CT-388. Petrelintide is in Phase 2 clinical development.

Under the agreement, Zealand and Roche will co-commercialize petrelintide in the US and Europe, while Roche will obtain exclusive rights to commercialize in the rest of the world. Roche will also be responsible for commercial manufacturing and supply.

Roche will pay Zealand an upfront cash payment of $1.65 billion and is eligible for up to $1.2 billion for initiating Phase 3 clinical development and $2.4 billion for reaching certain sales milestones. Zealand will pay Roche $350 million (to be offset against milestone payments) for the petrelintide/CT-388 fixed-dose combination product pursued under the agreement.

As new mechanisms emerge — amylin analogs, triple agonists, and oral alternatives — large pharmaceutical companies will continue to acquire or license assets that could disrupt or complement current standards, intensifying deal activity. The rapid pace of innovation, high demand, and number of players likely play key roles in allowing deals in this space to sail quickly through the merger review process.

III. Regeneron v. Amgen: Summary Judgment Ruling Highlights Growing Scrutiny of PBM Contracting Strategies

On April 5, 2025, the U.S. District Court for the District of Delaware denied Amgen’s motion for summary judgment in a lawsuit brought by Regeneron alleging exclusive dealing claims under Section 2 of the Sherman Act.¹ Regeneron accuses Amgen of unlawfully bundling PBM rebates for its cholesterol-lowering drug Repatha (a PCSK9i inhibitor) with other “blockbuster” drugs in its portfolio, including Enbrel and Otezla. Regeneron alleges that Amgen conditioned rebates on the PBMs’ agreement to exclude Regeneron’s competing PCSK9i drug, Praluent, from PBM formularies. Regeneron argues that because formulary placement often determines whether a drug is covered by insurance, exclusion of Praluent from key formularies effectively foreclosed market access.

In its motion for summary judgment seeking dismissal of the claims against it, Amgen argued that Regeneron improperly challenged “the realities of vigorous competition by Amgen,” not any anticompetitive conduct.² Amgen cited caselaw holding that exclusive rebate agreements “stimulate price competition,” and “are often entered into for entirely procompetitive reasons.”³ According to Amgen, its PBM negotiations reflected competitive behavior, which caused drug prices to fall.

In a three-page decision, the court denied Amgen’s summary judgment motion and permitted Regeneron’s claims to proceed to trial. It found that Regeneron had “presented evidence from which a jury could find” that Amgen “offered bundled discounts that restricted Regeneron’s access to portions of the market because it did not have an equally diverse drug portfolio” and “Amgen entered into de facto exclusive dealing arrangements that substantially foreclosed Regeneron from the market.” In reaching its decision, the court emphasized evidence that Amgen had leveraged its two dominant drugs, Otezla and Enbrel, to secure the purportedly exclusive PBM contracts.

It is worth noting that the FTC has focused on this theory of harm in merger reviews, investigating whether a transaction is likely to enable the buyer to engage in bundled rebates or similar contracting practices to exclude competitors. Indeed, the FTC’s failed attempt to block the Amgen/Horizon deal was based on the same theory. The Regeneron ruling and the FTC’s focus on these theories signals heightened litigation and investigation risk for pharmaceutical companies when negotiating exclusive or bundled PBM rebate contracts, particularly when those agreements are tied to dominant drugs in the manufacturer’s portfolio.

IV. California Antitrust Legislation in Flux: Court Strikes Down “Pay for Delay” Law as New Bill Seeks to Broaden Enforcement Scope

In February 2025, pharmaceutical companies secured a legal victory in a challenge to California’s controversial “pay for delay” statute (AB 824), a law targeting patent litigation settlement agreements between brand and generic drug manufacturers. Notably, AB 824 presumes that a settlement is anticompetitive and therefore subject to penalties of up to $20 million if a generic company receives “anything of value” from the brand company and also agrees to delay entering the market. The law is controversial because it flipped the traditional legal standard: Rather than requiring the state to first prove that the settlement was anticompetitive, the law shifted the initial burden to defendants to prove their settlement was procompetitive. The statute also drew scrutiny for its extraterritorial reach; it applied not only to conduct within California but also to settlement agreements negotiated outside the state.

The Association for Accessible Medicines (AAM), an industry association representing generic pharmaceutical manufacturers, filed suit in November 2019 challenging the law, arguing, inter alia, that it violated the Dormant Commerce Clause of the U.S. Constitution by attempting to regulate patent settlements negotiated outside of California’s borders. AAM sought an injunction, asserting that the law would deter legitimate patent settlements that otherwise accelerate generic competition prior to patent expiration.

On February 14, 2025, after more than five years of litigation, the district court granted summary judgment to AAM and issued a permanent injunction forbidding the enforcement of AB 824 over settlements negotiated outside of California. Given that most patent settlement negotiations will involve at least one party outside the state, the ruling effectively nullifies the statute. The case is on appeal to the Ninth Circuit, with further developments expected in the coming months.

On the heels of this court ruling, on February 24, 2025, California lawmakers announced a bill (SB 763) that would substantially increase potential exposure for businesses sued for violations of the Cartwright Act, California’s antitrust statute. Specifically, the bill seeks to add hefty civil penalties of up to $1 million per violation. According to California State Senator Melissa Hurtado, the proposed bill is intended to send a message, by “ensur[ing] that violating antitrust laws comes with real consequences, not just a slap on the wrist.” As of the date of this update, the bill was still in the early stages of the legislative process and is currently set for a hearing before the California Senate Appropriations Committee.

^[1] The trial began May 5, 2025, and is underway as of publication date.
^[2] Amgen’s Redacted Mot. for Summ. J, Case 1:22-cv-00697, ECF No 343 at 2 (D. Del). 
^[3] Id. at 17.

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