Qiagen/Thermo Fisher likely to see careful BMWi scrutiny due to COVID-19 testing – lawyers

The German Economics ministry is likely to be taking a careful look at Thermo Fisher Scientific’s acquisition of Qiagen due to Qiagen’s involvement in COVID-19 testing, two sector competition lawyers said.

 

This is a “timely” deal in the context of the COVID-19 crisis, a source familiar with the situation commented. The pandemic has triggered strong reactions around global supply chains for pharmaceutical products, and EU countries scrambled to strengthen their foreign direct Investment (FDI) rules in line with European Commission (EC) recommendations, the source noted.

 

In its offer document published on 18 May, Thermo Fisher said that it had submitted a voluntary application for a certificate of non-objection to the Ministry for Economic Affairs and Energy (BMWi) on 26 March and that the procedure was pending.

 

Since Thermo Fisher announced its EUR 10.4bn takeover of Qiagen, Germany has passed a bill tightening its FDI legislation. The new rules, passed on 18 June, extend investment screening to the healthcare sector and include a prohibition for parties in all sectors to close transactions before obtaining the approval by the BMWi. The Ministry may also decide to block a foreign investment in cases of “probable adverse effect” rather than on grounds of “actual and serious danger to the public order or security,” as per the previous legislation.

 

A spokesperson for the BMWi told this news service that the new rules on foreign investment will be enforced soon. It is unclear whether the new FDI rules would apply retroactively to Qiagen’s takeover by Thermo Fisher. However, as the deal was announced before the entry into force of the rules, they would not be expected to be applied retroactively, the two lawyers and the source familiar said.

 

The takeover of Qiagen has not sparked public outcry, unlike the rumoured takeover of CureVac, one of the lawyers commented. Germany witnessed a strong reaction to reports – later denied – that the US Administration had tried to acquire German biopharmaceutical company CureVac for exclusive rights to a COVID-19 vaccine. After the reports, however, the German Government invested EUR 300m in the biopharmaceutical company which is set to retain complete operational and strategic independence.

 

The BMWi , however, will likely investigate the deal thoroughly since Qiagen produces test kits for COVID-19, the two lawyers said. Qiagen has developed research use only (RUO) panel, called QIAstat-Dx Respiratory 2019-nCoV Panel, which differentiates COVID-19 from 21 other pathogens implicated in acute respiratory syndromes, according to company information. Thermo Fisher has also developed a real-time PCR diagnostic kit for COVID-19. Both Qiagen’s and Thermo Fisher’s tests were granted an Emergency Use Authorization by the US Food and Drug Administration (FDA).

 

The ministry will likely want to ensure that there is enough access to Qiagen’s test kits in Germany, the lawyers said. The first lawyer argued that that the Ministry is also likely making sure that Qiagen’s test kits are manufactured in Europe to avoid supply chain disruptions.

 

Any potential remedy requested by the ministry is likely to be behavioural, both lawyers agreed. For instance, the ministry could ask that German nationals are at the helm of Qiagen’s German operations or that a certain percentage of test kits is deployed in Germany, they said. In a similar healthcare deal in Italy, where foreign investment rules have also been strengthened amid COVID-19, the Italian Government has used its “golden powers” rules in relation to Japan’s AGC’s  acquisition of Italian group Molecular Medicine (MolMed). On 8 July, the Government imposed a number of behavioural remedies such as asking parties that any intellectual property transfer agreement is notified to the Ministry of Economic Development, and that MolMed’s research facilities remain in Italy.

 

To view the full article, please email Kasia Koslowska.

 

by Davide Salvi in London and Francesca Micheletti in Brussels