Blackstone Group (HK) Limited's proposed acquisition of I'rom Group Co Limited has been approved by the Australian Competition and Consumer Commission (ACCC), contingent upon the divestiture of CMAX Clinical Research Pty Ltd. This decision follows concerns that the acquisition would substantially lessen competition in the Australian market for phase 1 clinical trial services.
Addressing Competition Concerns
The ACCC's investigation revealed that the acquisition would combine the two largest suppliers of phase 1 clinical trial services in Australia: Nucleus Network Pty Limited, indirectly owned by Blackstone, and CMAX, owned by I'rom. Phase 1 clinical trials are a critical step in evaluating new therapeutic products, focusing on safety and tolerability in healthy volunteers.
ACCC Commissioner Dr Philip Williams stated, "Without the divestiture, the proposed acquisition would bring together the two largest suppliers of phase 1 clinical trials services in Australia. This transaction could have resulted in increased prices and reduced service quality for phase 1 clinical trial services. Alternative providers of phase 1 clinical trial services would be unlikely to effectively constrain a combined Nucleus and CMAX including due to their more limited bed capacity and differing levels of expertise."
The required divestiture of CMAX aims to mitigate these concerns by ensuring the sale of the entire CMAX business to a purchaser approved by the ACCC. This measure is intended to maintain competition and prevent potential price increases or service quality reductions.
Broader Implications
In addition to concerns about the consolidation of service providers, the ACCC also considered the potential for Blackstone to limit rival contract research organizations' (CROs) access to phase 1 clinical services provided by both Nucleus and CMAX. The divestiture of CMAX is expected to resolve this issue as well, ensuring fair access to these essential services.
Blackstone also holds a majority interest in Precision Medicine Group, which operates Precision for Medicine, a CRO that supplies clinical trial monitoring and management services. CROs play a vital role in assisting drug sponsors with selecting phase 1 clinical trial service providers.
Other suppliers of phase 1 clinical trial services in Australia include Veritus, Linear, Scientia, and Doherty Clinical Trials, along with several smaller providers. The ACCC's decision seeks to maintain a competitive landscape among these providers, ensuring that biotechnology and pharmaceutical companies have access to a range of options for their clinical trial needs.
