EU conducts inspections at pharmaceutical cos after launching inquiry UPDATE

The European Commission said it is conducting unannounced inspections at unnamed pharmaceutical companies across the 27 member state bloc after launching a general antitrust inquiry into the sector.

It said the inspections are taking place 'at the premises of a number of innovative and generics pharmaceutical companies', declining to provide further details.

Since the announcement, Sanofi-Aventis and GlaxoSmithKline confirmed they have been inspected. AstraZeneca PLC said it has been approached.

The commission noted that the investigation is in response to 'indications' that competition in pharmaceutical companies in Europe 'may not be working well'.

'Fewer new pharmaceuticals are being brought to market and the entry of generic pharmaceuticals sometimes seems to be delayed,' the commission said in a statement.

'In particular, the inquiry will examine whether agreements between pharmaceutical companies, such as settlements in patent disputes, may infringe (an EU) prohibition on restrictive business practices.

It will also look into whether companies may have created artificial barriers to entry, whether through the misuse of patent rights, vexatious litigation or other means, and whether such practices may infringe the (EU) ban on abuses of dominant market positions,' it added.

Working with national regulatory authorities on the matter, the commission is planning an interim report on the inquiry for the autumn this year, with final results expected in the spring of 2009.

EU competition commissioner Neelie Kroes told reporters that the inquiry is a 'major initiative'. She said the process is primarily an 'information gathering', but that the commission would not hesitate to take action in individual cases where necessary.

A source said the commission looks at 40 objective criteria to determine which companies it chooses for inspection.

Kroes said the inquiry has an economic imperative, with 200 bln eur spent on pharmaceutical products in the bloc each year.

Kroes added that the commission's competition services will be in close contact with the services of internal market commissioner Charlie McCreevy on the investigation.

She reiterated that the commission has a legal case pending in the courts regarding UK firm AstraZeneca and said the EU executive is involved in a 'couple' of other cases, declining to provide further details.

In June 2005, AstraZeneca said it would appeal a 60 mln eur fine imposed by the commission for illegally blocking generic versions of its stomach ulcer medicine Losec, and denied it misled patent offices or courts to prolong protection of the drug.

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