Notice2021-25150
Petition for Prior Approval of Sartorius Stedim Biotech S.A.'s Proposed Acquisition of Novasep Process SAS's Chromatography Equipment Business
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Published
November 18, 2021
Issuing agencies
Federal Trade Commission
Abstract
Sartorius Stedim Biotech S.A. ("Sartorius") has petitioned the Federal Trade Commission ("FTC" or "Commission") for approval of its acquisition of the chromatography equipment business of Novasep Process SAS. Sartorius was the FTC-approved divestiture buyer in 2020, when the FTC required Danaher Corporation to divest assets as a condition of acquiring General Electric's biopharmaceutical business, which included chromatography assets. Sartorius agreed to obtain the Commission's prior approval if it proposed to acquire Novasep's chromatography business.
Full Text
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[Federal Register Volume 86, Number 220 (Thursday, November 18, 2021)]
[Notices]
[Pages 64481-64491]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-25150]
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FEDERAL TRADE COMMISSION
[File No. 191 0082; Docket No. C-4710]
Petition for Prior Approval of Sartorius Stedim Biotech S.A.'s
Proposed Acquisition of Novasep Process SAS's Chromatography Equipment
Business
AGENCY: Federal Trade Commission.
ACTION: Announcement of petition; request for comment.
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SUMMARY: Sartorius Stedim Biotech S.A. (``Sartorius'') has petitioned
the Federal Trade Commission (``FTC'' or ``Commission'') for approval
of its acquisition of the chromatography equipment business of Novasep
Process SAS. Sartorius was the FTC-approved divestiture buyer in 2020,
when the FTC required Danaher Corporation to divest assets as a
condition of acquiring General Electric's biopharmaceutical business,
which included chromatography assets. Sartorius agreed to obtain the
Commission's prior approval if it proposed to acquire Novasep's
chromatography business.
DATES: Comments must be received on or before December 20, 2021.
ADDRESSES: Interested parties may file comments online or on paper, by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Please write: ``Sartorius
Petition for Prior Approval; Docket No. C-4710'' on your comment, and
file your comment online at <a href="http://www.regulations.gov">www.regulations.gov</a> by following the
instructions on the web-based form. If you prefer to file your comment
on paper, please mail your comment to the following address: Federal
Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW,
Suite CC-5610 (Annex D), Washington, DC 20580; or deliver your comment
to the following address: Federal Trade Commission, Office of the
Secretary, Constitution Center, 400 7th Street SW, 5th Floor, Suite
5610 (Annex D), Washington, DC 20024.
FOR FURTHER INFORMATION CONTACT: Lisa De Marchi Sleigh (202-326-2535),
Bureau of Competition, Federal Trade Commission, 600 Pennsylvania
Avenue NW, Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant to FTC Rule 2.41(f), 16 CFR
2.41(f), notice is hereby given that the public [redacted] version of
the above-captioned petition has been filed with the Secretary of the
Commission and is being placed on the public record for a period of
thirty (30) days. After the period for public comments has expired, the
Commission shall determine whether to approve the petition. In making
its determination, the Commission will consider, among other
information, all timely and responsive comments submitted in connection
with this document.
The text of the public [redacted] version of the petition is
provided below. An electronic copy of the text of the public [redacted]
version of the petition can be obtained from the FTC website at this
web address: <a href="https://www.ftc.gov/enforcement/cases-proceedings/191-0082/danaher-corporation-matter">https://www.ftc.gov/enforcement/cases-proceedings/191-0082/danaher-corporation-matter</a>.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before December 20,
2021. Write ``Sartorius Petition for Prior Approval; Docket No. C-
4710'' on your comment. Your comment--including your name and your
state--will be placed on the public record of this proceeding,
including, to the extent practicable, on the <a href="http://www.regulations.gov">www.regulations.gov</a>
website.
Due to protective actions in response to the COVID-19 pandemic and
the agency's heightened security screening, postal mail addressed to
the Commission will be subject to delay. We strongly encourage you to
submit your comments online through the <a href="http://www.regulations.gov">www.regulations.gov</a> website.
If you prefer to file your comment on paper, write ``Sartorius
Petition for Prior Approval; Docket No. C-4710'' on your comment and on
the envelope, and mail your comment to the following address: Federal
Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW,
Suite CC-5610 (Annex D), Washington, DC 20580; or deliver your comment
to the following address: Federal Trade Commission, Office of the
Secretary, Constitution Center, 400 7th Street SW, 5th Floor, Suite
5610 (Annex D), Washington, DC 20024. If possible, submit your paper
comment to the Commission by courier or overnight service.
Because your comment will be placed on the publicly accessible
website at <a href="http://www.regulations.gov">www.regulations.gov</a>, you are solely responsible for making
sure your comment does not include any sensitive or confidential
information. In particular, your comment should not include any
sensitive personal information, such as your or anyone else's Social
Security number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. You are also
solely responsible for making sure your comment does not include any
sensitive health information, such as medical records or other
individually identifiable health information. In addition, your comment
should not include any ``trade secret or any commercial or financial
information which . . . is privileged or confidential''--as provided by
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2),
16 CFR 4.10(a)(2)--including in particular competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular,
the written request for confidential treatment that accompanies the
comment must include the factual and legal basis for the request, and
must identify the specific portions of the comment to be withheld from
the public record. See FTC Rule 4.9(c). Your comment will be kept
confidential only if the General Counsel grants your request in
accordance with the law and the public interest. Once your comment has
been posted on <a href="http://www.regulations.gov">www.regulations.gov</a>--as legally required by FTC Rule
4.9(b)--we cannot redact or remove your comment from that website,
unless you submit a confidentiality request that meets the requirements
for such treatment under FTC Rule 4.9(c), and the General Counsel
grants that request.
Visit the FTC website at <a href="http://www.ftc.gov">http://www.ftc.gov</a> to read this document
and the news release describing this matter. The FTC Act and other laws
that the Commission administers permit the collection of public
comments to consider and use in this proceeding, as appropriate. The
Commission will consider all timely and responsive public comments that
it receives on or before December 20, 2021. For information on the
Commission's privacy policy, including routine uses permitted by the
Privacy Act, see
[[Page 64482]]
<a href="https://www.ftc.gov/site-information/privacy-policy">https://www.ftc.gov/site-information/privacy-policy</a>.
Joel Christie,
Acting Secretary.
Petition for Prior Approval of Sartorius Stedim Biotech S.A.'s Proposed
Acquisition of Novasep Process SAS's Chromatography Equipment Business
I. Introduction
Pursuant to Section 2.41(f) of the Federal Trade Commission (the
``FTC'' or the ``Commission'') Rules of Practice and Procedure \1\ and
Section X(B) of the May 28, 2020 final decision and order in In the
Matter of Danaher Corporation and General Electric Company (the
``Danaher Order'' or ``Order''),\2\ Sartorius Stedim Biotech S.A.
(``Sartorius'') hereby petitions the Commission to approve its proposed
acquisition of the chromatography equipment business of Novasep Process
SAS (``Novasep'' and, together with Sartorius, the ``Parties'') (the
``Proposed Transaction'').
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\1\ 16 CFR 2.41(f).
\2\ In the Matter of Danaher Corp. and General Electric Co.,
Decision and Order, Docket No. C-4710, (F.T.C. May 28, 2020),
<a href="https://www.ftc.gov/system/files/documents/cases/191_0082_c4710_danaher_do_0.pdf">https://www.ftc.gov/system/files/documents/cases/191_0082_c4710_danaher_do_0.pdf</a> (hereinafter, the ``Danaher
Order''), at Sec. X(B).
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The Commission's Order was entered to resolve competition concerns
arising from Danaher Corporation's (``Danaher'') $21.4 billion
acquisition of General Electric Company's (``GE'') biopharma business.
Danaher and GE have been leading suppliers of manufacturing equipment
and related products to the biopharma industry for many years. The FTC
was concerned that combining Danaher's Pall Biotech and GE's Cytiva
chromatography equipment product lines would create or reinforce
dominant market positions in: (1) Conventional low pressure liquid
chromatography (``LPLC'') columns; \3\ (2) conventional LPLC skids; \4\
(3) single-use (``SU'') LPLC chromatography skids; and (4) LPLC
continuous chromatography systems.\5\ By requiring Danaher to divest to
Sartorius the overlapping Pall Biotech products in these segments
(collectively, the ``Pall Assets''), the FTC facilitated a new entrant
in this important area of downstream biopharmaceutical
manufacturing.\6\ In support of its determination that Sartorius would
be a suitable purchaser of the Pall Assets and other Danaher divested
assets, the Commission explained: ``Sartorius's existing biopharma
business includes products that are highly complementary to the
divestiture assets. Sartorius has the expertise, worldwide sales
infrastructure, and resources to restore the competition that otherwise
would have been lost due to the proposed Acquisition.'' \7\ Sartorius
completed the acquisition on April 30, 2020.\8\
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\3\ ``Conventional LPLC columns are containers that hold
chromatography resins used as the adsorbent during the stationary
phase. Columns are made of glass, stainless steel, acrylic glass, or
plastic[.]'' In the Matter of Danaher Corp. and General Electric
Co., Complaint at ] III(5)(b), Docket No. C-4710 (F.T.C. Mar. 19,
2020), <a href="https://www.ftc.gov/system/files/documents/cases/191_0082_c4710_danaher_ge_complaint.pdf">https://www.ftc.gov/system/files/documents/cases/191_0082_c4710_danaher_ge_complaint.pdf</a> (hereinafter, the ``Danaher
Complaint'').
\4\ ``Conventional LPLC skids control the flow of liquid in the
chromatography process. Conventional LPLC skids contain a system of
pumps, valves, sensors, tubing, electronic components, software, and
flow paths composed of multi-use components[.]'' Danaher Complaint,
at ] III(5)(c).
\5\ ``LPLC continuous chromatography systems allow for the
simultaneous processing of multiple columns in LPLC. LPLC continuous
chromatography systems consist of pumps, valves, sensors, tubing,
electronic components, software, and flow paths composed of either
multi-use or single-use components[.]'' Danaher Complaint, at ]
III(5)(f). ``While continuous chromatography has for some time been
an accepted practice by small-molecule manufacturers, it is not yet
[as] widely used in larger bio-manufacturing processes.'' European
Commission: DG Competition, Danaher/GE Healthcare Life Sciences
Biopharma, Case M.9331, Commission Decision, at ] 367, <a href="https://ec.europa.eu/competition/mergers/cases/decisions/m9331_3668_3.pdf">https://ec.europa.eu/competition/mergers/cases/decisions/m9331_3668_3.pdf</a>
(last visited Oct. 22, 2021) (hereinafter, ``European Commission
Decision'').
\6\ See Danaher Order at Sec. I(N); Danaher Complaint, at ] 5.
\7\ In the Matter of Danaher Corp. and General Electric Co.,
Analysis of Agreement Containing Consent Orders to Aid Public
Comment. at 5, Docket No. C-4710, File No. 191-0082 (F.T.C.),
<a href="https://www.ftc.gov/system/files/documents/cases/191_0082_danaher-ge_aapc.pdf">https://www.ftc.gov/system/files/documents/cases/191_0082_danaher-ge_aapc.pdf</a> (last visited Oct. 22, 2021).
\8\ Sartorius closes acquisition of selected assets of Danaher
Life Sciences, Sartorius (Apr. 30, 2020), <a href="https://www.sartorius.com/en/company/newsroom/corporate-news/483898-483898">https://www.sartorius.com/en/company/newsroom/corporate-news/483898-483898</a>.
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As a new entrant in the chromatography equipment business,
Sartorius is playing ``catch up'' with incumbent chromatography
suppliers that have long dominated the industry, including Danaher/GE,
Merck Millipore, and Thermo Fisher. To compete with these incumbent
suppliers, which benefit from an extensive installed base of
chromatography equipment, Sartorius must offer customers a range of
innovative products and disruptive technologies that generate
significant productivity gains and cost savings to justify customers
replacing their existing legacy equipment.\9\
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\9\ See SART_0002159--SART_0002187, at SART_0002173 (comparing
projected customer cost savings of the Parties' jointly developed
BioSC-RCC system to GE/Cytiva's conventional LPLC batch equipment).
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By bringing together the Parties' largely complementary
chromatography equipment businesses and technologies, the Proposed
Transaction will accelerate Sartorius's efforts to commercialize
disruptive technologies needed to achieve a more efficient, more
productive, and lower cost drug and vaccine production infrastructure
that will improve healthcare outcomes and benefit consumers throughout
the U.S. and around the world.
a. Background to the Proposed Transaction
Through the Proposed Transaction, the Parties will be able to
achieve innovations in biopharma manufacturing that are necessary to
bring new drugs and vaccines to market more quickly, cost-effectively,
and equitably. The COVID-19 pandemic has underscored the critical
importance of having a robust biopharma infrastructure to combat new
viruses and diseases. There is a need for innovative manufacturing
processes that are capable of developing and mass-producing new drugs
and vaccines rapidly and cost-effectively. Although the biopharma
industry quickly rose to the challenge of developing biologic therapies
and vaccines to ameliorate the severity of COVID-19, those medical
breakthroughs were not available on a large scale to populations in the
U.S. and around the world in time to avoid significant loss of human
life. New COVID-19 variants and novel diseases will remain an ongoing
public health concern, and the biopharma industry needs to be able to
respond quickly, equitably, and efficiently to address these threats to
public health and economic security around the world.
To ensure that all members of the population have timely access to
life saving drugs and vaccines at reasonable cost, disruptive
technologies are needed to remove bottlenecks in biopharma drug and
vaccine development and manufacturing. One of the primary roadblocks to
achieving this goal with protein-based therapies is that ``downstream''
biopharma production--the purification of cell mass to eliminate
contaminants and unwanted viruses that occurs after the ``upstream''
process of discovery, development, and growth of therapeutic cell
mass--is still a relatively inefficient process. These inefficiencies
inhibit the biopharma industry from being able to provide patients with
rapid access to life saving therapies and provide new vaccines to
entire populations on a large scale. For decades, downstream
chromatography has been performed using conventional ``batch'' LPLC
equipment packed with specialized, costly resins (such as Protein A
resins) to purify the product. This process does not utilize resins
efficiently, and significant volumes are
[[Page 64483]]
wasted in the process.\10\ Furthermore, each of the up to four
downstream chromatography steps are performed using separate equipment,
which results in additional inefficiencies and bottlenecks.\11\
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\10\ See SART_0016472, at 19 (indicating customers' most
significant chromatography challenges include the high cost
associated with the inefficient use of resins, the relatively slow
speed of conventional batch chromatography, and the large spaces
within manufacturing facilities required to house conventional batch
chromatography equipment).
\11\ See infra Section III(c)(i).
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The leading incumbent suppliers of conventional LPLC systems--
including Danaher/GE, Merck Millipore, and Thermo Fisher--also have
resin supply businesses (including the costly Protein A resin) that are
highly profitable and generate very significant recurring revenues.
These incumbent suppliers are incentivized to maintain the status quo
to protect their installed base of conventional LPLC equipment and the
significant recurring resin revenues they generate. As a result, they
have not aggressively pursued innovations in downstream chromatography
that are necessary to address the bottlenecks that inhibit the rapid
and cost-effective development and production of biologic drugs and
vaccines. New disruptive technologies are required to replace this
installed base of resin-dependent legacy chromatography equipment with
innovative equipment and technologies that reduce (and ultimately will
eliminate) bottlenecks.
The acquisition will allow Sartorius to accelerate the development
and commercialization of ``intensified'' LPLC chromatography systems as
platforms for innovation to support the biopharma industry's need to
develop and commercialize lifesaving vaccines and biologic drugs faster
and at lower cost.
b. The Sartorius-Novasep Collaboration
Sartorius is a disruptor to the resin industry and a new entrant in
the chromatography equipment business that must continue to innovate to
successfully compete with larger incumbent suppliers. For the past
several years, Sartorius has been pursuing a strategic collaboration
with Novasep that utilizes Sartorius's disruptive membrane technology,
Sartobind (which eliminates the need for costly resins), with Novasep's
innovative LPLC continuous chromatography system, BioSC (which combines
several downstream processing steps in one platform). The innovative
product development that Sartorius and Novasep have been pursuing
through their collaboration offers the potential for significant
productivity gains and cost savings in the development and production
of biopharma drugs and vaccines. Notably, the Parties have developed a
unique new product, BioSC-RCC, an intensified chromatography system
that eliminates the need for resin, which is currently in customer
trials.
After the collaboration was already well advanced, Novasep made a
strategic decision to exit the chromatography equipment business for
reasons that are further explained in Section II below.\12\ Novasep
viewed Sartorius as the natural acquirer of the business because
Sartorius was already utilizing Novasep's LPLC continuous
chromatography system (BioSC) as a platform for its innovative membrane
technology.\13\ Since Novasep had decided to exit and sell the
business, both Parties concluded that acquiring the business was the
only way to preserve the fruits of the collaboration, and achieve
further innovations utilizing a combination of Novasep and Sartorius
technologies, know-how, and equipment.
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\12\ See Rebecca H. Farrington Letter to Lisa DeMarchi Sleigh,
dated August 9, 2021 (regarding Novasep's decision to exit the
chromatography equipment business).
\13\ Id. at 6-7; see also NOVA-002147, at NOVA-002147
(containing Novasep Holding Meeting Minutes from November 20, 2020).
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Due to the accelerated timing of the Pall Asset divestitures,
Sartorius acquired the Pall Assets before finalizing its agreement to
acquire Novasep's chromatography equipment business. The Pall Assets
include BioSMB, a LPLC continuous chromatography system that offers
some of the same process intensification capabilities as BioSC. Because
the Novasep acquisition was not reportable under the Hart-Scott-Rodino
Act, Sartorius agreed to provide the FTC an opportunity to review the
transaction and not to close without the Commission's prior
approval.\14\
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\14\ Danaher Order at Sec. Sec. II(A), X(B).
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c. The Proposed Transaction
On March 2, 2021, following approval by Novasep's French Works
Council, the Parties executed a share and asset purchase agreement
(``SAPA'') to sell Novasep's chromatography equipment business to
Sartorius.\15\ To effectuate the Proposed Transaction, Novasep has
contributed the assets that comprise its chromatography business in
France to a NewCo that Sartorius will acquire in a stock purchase
transaction, in addition to assets that comprise Novasep's U.S. and
Chinese chromatography businesses. Both Parties have received uniformly
positive feedback from customers who view Sartorius as an innovative
supplier that will be able to overcome the challenges that Novasep has
experienced with its LPLC business.\16\
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\15\ SART_0001673--SART_0002117.
\16\ See, e.g., SART_0171028 (customer letter in support of
transaction); NOVA-002483--NOVA-002484; NOVA-002485; NOVA-002486
(customer declarations in support of transaction).
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d. The PharmaZell-Novasep Transaction
On September 16, 2021, Novasep announced it had entered into
exclusive negotiations to create a common platform in the contract
development and manufacturing organization (``CDMO'') space through a
proposed merger with PharmaZell.\17\ The transaction excludes Novasep's
chromatography equipment business, which is not a strategic fit with
PharmaZell's or Novasep's CDMO businesses.\18\ PharmaZell has no
interest in acquiring Novasep's chromatography equipment business if
the sale to Sartorius does not proceed. In that event, the
chromatography equipment business (the French portion of which has
already been transferred to a NewCo in preparation for the sale to
Sartorius) would be transferred to NVHL S.A., a non-operating holding
company owned by Novasep's private investors, which include funds
focused on credit and special situations investments.
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\17\ See PharmaZell and Novasep enter into exclusive
negotiations in new drive to create a technology-driven leader for
complex small molecules and ADCs of global scale, PharmaZell (Sept.
16, 2021), <a href="https://pharmazell-group.com/blog/2021/09/16/pharmazell-and-novasep-enter-into-exclusive-negotiations-in-new-drive-to-create-a-technology-driven-leader-for-complex-small-molecules-and-adcs-of-global-scale/">https://pharmazell-group.com/blog/2021/09/16/pharmazell-and-novasep-enter-into-exclusive-negotiations-in-new-drive-to-create-a-technology-driven-leader-for-complex-small-molecules-and-adcs-of-global-scale/</a>.
\18\ See Rebecca H. Farrington Letter to Lisa DeMarchi Sleigh,
dated October 7, 2021 (regarding proposed PharmaZell-Novasep
transaction).
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e. Procompetitive Effects of the Proposed Transaction
As described further in Section III below, as a result of the
Proposed Transaction:
<bullet> Novasep's high pressure liquid chromatography (``HPLC'')
equipment, which is used for the production of small molecules, and
LPLC equipment will be supported by a manufacturer with a reputation
for producing high quality innovative products and a global marketing,
sales and service infrastructure. As part of Sartorius's broader
product portfolio and global sales and service infrastructure,
Novasep's chromatography business will have a stronger platform for
commercial success.
[[Page 64484]]
[cir] The benefits will be particularly pronounced in the U.S.
where Sartorius has a robust sales and service infrastructure and
Novasep has very limited presence.
<bullet> All of Novasep's chromatography equipment product lines
will benefit from Sartorius's more efficient manufacturing and
distribution, greater security of supply, and accelerated delivery
times, which will increase their competitiveness and penetration with
new customers and in new applications.
<bullet> The Parties' LPLC continuous chromatography systems are
differentiated products that virtually never compete directly.
[cir] Sartorius's BioSMB system and Novasep's BioSC system are
based on different technologies that provide process intensification in
different ways and meet distinct customer needs and manufacturing
strategies.
<bullet> As a disruptor and new entrant in a space with strong
incumbents and increasing competition, Sartorius has a strong incentive
to continue to invest in and innovate with both of the differentiated
process intensification platforms it will be offering to biopharma
customers: BioSC and BioSMB.
[cir] Sartorius's product roadmap and research and development
plans demonstrate that Sartorius will continue to support, enhance, and
innovate with both of these platforms.
[cir] Sartorius also has made specific commitments to the French
government to maintain and invest in Novasep's chromatography equipment
business and retain its employees.\19\
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\19\ See Andrew S. Wellin Letter to Lisa DeMarchi Sleigh, dated
July 1, 2021 (regarding Sartorius's commitments in connection with
French foreign investment approval of the Proposed Transaction).
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<bullet> The transaction poses no risk to competition in HPLC
columns or skids as Sartorius has no HPLC product offering.
<bullet> The transaction similarly poses no risk to competition in
conventional LPLC columns or skids because Novasep has de minimis sales
and market shares in these products.
II. The Parties and the Transaction Rationale
a. The Parties
i. Sartorius
Sartorius is a supplier of innovative, cost-effective technologies
and products that accelerate biopharma development and increase the
speed, efficiency, and safety of biopharma production. Sartorius's
Bioprocessing Solutions Division (``BPS'') supports all phases of
biopharmaceutical product development, from early phase development to
commercial manufacturing, from cell line development to process
development, including upstream and downstream processing. Sartorius's
innovative membrane technology (Sartobind) eliminates the use of resins
in certain downstream chromatography processing steps--a significant
advance that holds the promise of improving the efficiency and reducing
the cost of developing and manufacturing biologic drugs and vaccines,
compared to traditional batch chromatography systems.\20\
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\20\ SART_0006206, at 5, 12 (indicating that Sartobind Rapid A
membranes have significantly higher productivity than Protein A
resins and can be easily scaled up for commercial production).
Sartorius's membrane innovations have the potential to be a
significant disrupter to traditional resin suppliers, led by Danaher
(Cytiva), which has an estimated 75% market share in Protein A
resin.
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Sartorius has a worldwide presence with manufacturing, sales, and
research and development (``R&D'') sites in more than 20 countries in
Europe, North America, and Asia. Sartorius also has expertise in SU
bioprocessing technologies, including LPLC equipment, as well as in
value-added automation technology and software, which it uses to meet
the evolving technology needs of its large molecule biopharma
customers.
ii. Novasep
Novasep is a provider of services, equipment, and ingredients to
the pharmaceutical, chemical, and food industries. Novasep's core focus
and competency is its CDMO business, which accounts for over [REDACTED]
of its overall revenues. Novasep's much smaller chromatography
equipment business is focused on supporting the development and
production of smaller molecule drugs and applications.
From its historic roots in food production, Novasep has developed
expertise in multi-use (``MU'') HPLC equipment, which is used in the
production of small molecule drugs. Novasep derives a high proportion
(75-85%) of its chromatography equipment revenue and profits from the
sale of HPLC equipment.\21\ Novasep's LPLC equipment business, by
contrast, is very small, as Novasep has struggled to penetrate
biopharma customers. Novasep's equipment utilizes MU technology, which
is cleaned and then re-used in different bioprocessing production runs.
Many biopharma customers increasingly require equipment that uses SU
flow-paths for manufacturing at commercial scale. Novasep has no
expertise in the plastics technologies required to produce SU (i.e.,
disposable) flow-paths and has been unable to develop a SU flow-path
for BioSC or its other LPLC equipment.\22\ Novasep's LPLC business is
not profitable on a standalone basis, and has declined over the last
several years.\23\
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\21\ See NOVA-Appendix 13-00000095, at NOVA-Appendix 13-
00000098; NOVA-Appendix 13-00000143, at NOVA-Appendix 13-00000147.
\22\ See Rebecca H. Farrington Letter to Lisa DeMarchi Sleigh,
dated August 9, 2021, at 5-6 (regarding Novasep's decision to exit
the chromatography equipment business); Rebecca H. Farrington Letter
to Lisa DeMarchi Sleigh, dated October 4, 2021 (regarding Novasep's
inability to develop a SU flow-path); NOVA-000872, at NOVA-000875,
NOVA-000881 (Budget 2020 BU Process Solutions, October 30, 2019);
NOVA-000691, at NOVA-000703 (Budget 2021 Equipment Solutions,
December 22, 2020); NOVA-000783, at NOVA-000796 (Novasep Business
Review, April 2020); SART_0000526--SART_0000538, at SART_0000533
(stating Novasep's ``[i]nability to develop SU flowpath has
challenged business growth especially in North America.''); NOVA-
001091--NOVA-001097, at NOVA-001095.
\23\ See NOVA-Appendix 13-00000001, at NOVA-Appendix 13-
00000004; NOVA-Appendix 13-00000048, at NOVA-Appendix 13-00000051;
NOVA-Appendix 13-00000095, at NOVA-Appendix 13-00000098; NOVA-
Appendix 13-00000143, at NOVA-Appendix 13-00000147; see also Rebecca
H. Farrington Letter to Lisa DeMarchi Sleigh, dated October 8, 2021
(regarding Novasep's financial condition).
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b. The Transaction Rationale
In 2019, Novasep made a strategic decision to exit the
chromatography equipment business. Novasep has had significant
financial and operational challenges with the business,\24\ which is
highly capital intensive and lacks synergies with its core CDMO
business. As mentioned above, Novasep's chromatography equipment
business generates 75-85% of its revenues from sales of HPLC equipment
used in small molecule drug production.\25\ To address the increasing
importance of biopharmaceutical medicine, Novasep also has developed
LPLC equipment for larger molecule biopharma drug and vaccine
production. However, Novasep has been unable to gain traction with
larger biomolecule customers and applications. Thus, its LPLC business
remains very small. Novasep's lack of SU technology, which many
biopharma customers (particularly in North America) prefer for drug and
vaccine manufacturing at clinical and commercial scales, also has
hampered
[[Page 64485]]
its efforts to develop the LPLC business.\26\
---------------------------------------------------------------------------
\24\ See e.g., NOVA-VAL-0028970 at 2; NOVA-VAL-0028981, at 2;
NOVA-VAL-0039971, at 3; see generally Rebecca H. Farrington Letter
to Lisa DeMarchi Sleigh, dated August 9, 2021 (regarding Novasep's
decision to exit the chromatography equipment business).
\25\ See NOVA-Appendix 13-00000095, at NOVA-Appendix 13-
00000098; NOVA-Appendix 13-00000143, at NOVA-Appendix 13-00000147.
\26\ See Rebecca H. Farrington Letter to Lisa DeMarchi Sleigh,
dated August 9, 2021, at 5-6 (regarding Novasep's decision to exit
the chromatography equipment business); see also Rebecca H.
Farrington Letter to Lisa DeMarchi Sleigh, dated October 4, 2021
(regarding Novasep's inability to develop a SU flow-path); NOVA-
000691--NOVA-000748, at NOVA-000708 (Budget 2021 Equipment
Solutions).
---------------------------------------------------------------------------
In sum, Novasep concluded that it did not have the
infrastructure,\27\ reputation, or SU technology to grow its LPLC
business successfully on its own. Furthermore, because Novasep is
dependent on equipment sales, which are lumpy and unpredictable, and
Novasep lacks a consumables business that would generate regular
recurring revenues, Novasep has been unable to make the necessary
investments to update its LPLC product line or develop next generation
chromatography technologies, despite customer needs and requests for SU
technology.\28\ Given these challenging financial dynamics and the
significant ongoing capital needs of its chromatography equipment
business, Novasep realized that it would continue to lose competitive
ground in an increasingly competitive space if it held on to this
business.\29\ In contrast, selling the equipment business to Sartorius
would allow Novasep to focus resources on its core CDMO business.
---------------------------------------------------------------------------
\27\ For example, Novasep has limited customer service and
support. See, e.g., NOVA-VAL-0000079; NOVA-VAL-0014556; NOVA-VAL-
0018504; NOVA-VAL-0025513; NOVA-VAL-0027911; NOVA-VAL-0063924; NOVA-
VAL-0063984; NOVA-VAL-0073282; NOVA-VAL-0073557; NOVA-VAL-0075029
(documents discussing software challenges, December 22, 2020).
\28\ See NOVA-000001, at NOVA-000039 (Novasep Strategy
Discussions and Options, July 2019). See also, e.g., NOVA-001208, at
NOVA-001208, NOVA-001209; NOVA-VAL-0027941; NOVA-VAL-0038766; NOVA-
VAL-0040141.
\29\ See Rebecca H. Farrington Letter to Lisa DeMarchi Sleigh,
dated August 9, 2021, at 2-3 (regarding Novasep's decision to exit
the chromatography equipment business).
---------------------------------------------------------------------------
i. The Proposed Transaction is Necessary To Protect the Fruits of the
Parties' Collaboration
Sartorius's acquisition of Novasep's chromatography equipment
business was a natural evolution of the Parties' multi-year
collaboration to develop innovative alternatives to the legacy batch
chromatography equipment that is dependent on the use of resin, which
is often supplied by incumbent chromatography equipment suppliers.
These incumbent suppliers, including Danaher/GE, Merck Millipore, and
Thermo Fisher, generate significant revenues and profits from the sale
of costly resins, such as Protein A, required for the batch
chromatography process. Protein A, which is required for the production
of monoclonal antibody (``mAb'') drug therapies (e.g., COVID antibody
``cocktails''), can cost anywhere from $5,000 to $16,000 per liter.
Sartorius's collaboration with Novasep already has produced a new
product--BioSC-RCC--that utilizes Novasep's BioSC LPLC continuous
chromatography system as a platform for Sartorius's innovative membrane
technology. BioSC-RCC provides an alternative to resin-based
chromatography, and promises to accelerate the speed and efficiency of
large molecule discovery and production, while greatly reducing process
risk and cost.
To accelerate access to this disruptive new product, the Parties
initially developed and launched BioSC-RCC MU, which utilizes BioSC's
existing BioSC platform and MU technology. BioSC-RCC MU is currently
being tested by potential customers, who have shown strong interest in
this unique new product that eliminates the need for costly resin and
offers productivity gains, and cost and process risk reductions.
However, to convert customer interest to actual sales, many of these
potential customers will need to be assured that Sartorius will develop
a BioSC-RCC version with a SU flow-path that they can use at larger
scales. Once the transaction closes, Sartorius will be able to move
forward with the development of a SU flow-path for the BioSC-RCC system
and launch a SU version (BioSC-RCC SU) in 2022.\30\
---------------------------------------------------------------------------
\30\ See SART_0000487--SART_0000498, at SART_0000498;
SART_0001130--SART_1177, at SART_0001151 (Sartorius's acquisition
business case assumes a multiyear investment in the development of a
SU flow-path for BioSC RCC); id. at SART_0001171 (Sartorius's
acquisition business plan assumptions include sales projections for
SU BioSC-RCC systems).
---------------------------------------------------------------------------
Although Sartorius was willing to make the investments to develop a
prototype of BioSC-RCC MU pursuant to the collaboration, transforming
the BioSC-RCC prototype into a commercially viable product has been
(and will continue to be) challenging absent the Proposed Transaction
due, in part, to Novasep's high cost of manufacturing BioSC, which
limits the return on investment required to launch and maintain a new
product long term.\31\
---------------------------------------------------------------------------
\31\ See SART_0063502 (Sartorius BioSC-RCC margin calculations).
---------------------------------------------------------------------------
Furthermore, the BioSC platform needs substantial upgrades and
enhancements before any BioSC system (BioSC or BioSC-RCC) can be
successfully commercialized. While BioSC utilizes an innovative
continuous chromatography process and its integrated architecture works
well with Sartorius's rapid cycling chromatography (``RCC'') process
and membrane technology, it has suffered from years of underinvestment.
In addition to its lack of a SU flow-path, there have been ongoing
challenges with its software (which is supplied by GE/Cytiva), the lab
scale version of the system does not easily ``scale up'' to clinical
and commercial scale versions of the system, and its engineered-to-
order design and manufacturing process does not meet biopharma customer
preferences for off-the-shelf systems with accelerated delivery times.
The investments required to address these problems with the BioSC
platform are beyond Sartorius's ability to address in the context of
the Parties' collaboration because Sartorius does not own the platform,
and in the case of BioSC-RCC MU has limited, short-term marketing
rights and, for a potential BioSC-RCC SU version, no rights at all.\32\
---------------------------------------------------------------------------
\32\ See generally SART_0002268--SART_0002303 (Collaboration
Interim Manufacturing and Marketing Agreement).
---------------------------------------------------------------------------
While Sartorius believes that the development of a SU flow-path,
redesign of BioSC lab to easily scale up, standardization of the
platform and manufacturing process, and software improvements will
allow BioSC and BioSC-RCC to be commercially successful,\33\ these
investments only make sense if Sartorius has the ability to achieve the
necessary innovations and recoup its investment. Sartorius cannot
achieve these innovations or recoup its investment in a system it does
not own and, therefore, has no ability to redesign, manufacture, market
or sell.
---------------------------------------------------------------------------
\33\ See SART_0000539, at ``EUR Summary'' tab (Sartorius
discounted cash flow analysis prepared for transaction valuation
purposes indicating accelerating BioSC/BioSC-RCC growth due to
investments).
---------------------------------------------------------------------------
The acquisition of Novasep's chromatography equipment business is
critical to successfully commercializing those innovations. Unless the
acquisition is approved, the innovations the Parties have already
developed (and plan to pursue after the acquisition) very likely will
be lost. The ``winners'' will be incumbent suppliers, who will remain
immune from disruptive technologies that would erode their installed
base of outdated and inefficient equipment. The biggest ``losers'' will
be biopharma producers and consumers who need new and improved
biopharma manufacturing infrastructure to provide timely, efficient,
and cost-effective access to new drugs and vaccines to address
[[Page 64486]]
public health risks and keep economies functioning well.
ii. The Proposed Transaction Will Enhance Sartorius's Competitiveness
as a New Entrant That Competes Through Innovation
Sartorius's acquisition of Novasep's chromatography equipment
business will provide complementary technologies and expertise to
``fill in the gaps'' in Sartorius's newly acquired downstream LPLC
bioprocessing equipment portfolio.\34\
---------------------------------------------------------------------------
\34\ See SART_0160423, at 2 (explaining how Sartorius is
positioning itself to provide customers with more options in
intensified downstream processing in a highly competitive
environment of large, established players, where technology progress
is already pointing towards continuous manufacturing); SART_0115519,
at 12 (July 2021 BioSMB Business Plan projecting distinct growth
rates for BioSC, BioSMB, and BioSC RCC).
---------------------------------------------------------------------------
The acquisition of Novasep's HPLC equipment will enable Sartorius
to offer customers a complete range of technologies for the
purification of smaller molecules, complementing Sartorius's LPLC
equipment that serves larger molecule biopharma manufacturing.
Historically, Novasep's HPLC equipment was predominantly used to purify
smaller molecule active ingredients and insulin. Recently, Novasep's
HPLC equipment has played a critical role in the purification of key
components of mRNA and recombinant protein COVID vaccines. Through its
extensive sales and service network, Sartorius will be able to expand
the reach and availability of Novasep's HPLC equipment across the
globe, offer a full line of LPLC and HPLC equipment for customers who
prefer to purchase from one source, and provide more choices in
equipment and services for producers of life-saving drug therapies and
vaccines.
In addition to supporting and enhancing Novasep's HPLC business,
the acquisition will enable Sartorius to successfully commercialize
BioSC, Novasep's LPLC ``multistep'' intensified chromatography system,
an innovative technology that Novasep has struggled to commercialize,
particularly in North America, for reasons that include its limited
sales presence, lack of SU technology, and inability to invest in
necessary improvements and innovations (see further Section III(c)(ii)
below). BioSC has achieved very few sales at the clinical or commercial
scale, and sales have stagnated. Biopharma customers are making
decisions today about investments in their manufacturing infrastructure
for decades to come. Absent the Proposed Transaction and the investment
and innovation Sartorius is uniquely placed to make to transform BioSC
into a commercially attractive option, customers will miss a critical
window to realize BioSC's potential to improve the downstream biopharma
manufacturing process.
c. FTC Procedural History
The FTC has conducted an extensive investigation of Sartorius's
proposed acquisition of Novasep's chromatography equipment business.
Sartorius provided an initial briefing on the Proposed Transaction in
July 2020 and formally notified the transaction on January 21, 2021.
The Parties have voluntarily produced numerous documents, data and
submissions to the FTC, and regularly addressed staff questions as they
arose in their investigation of the Proposed Transaction. In addition,
Sartorius and Novasep management presented to, and were interviewed by,
FTC staff. Both before and in response to the FTC's Voluntary Access
Letters (``VALs'') issued in June 2021, Sartorius and Novasep each
produced thousands of ordinary course business documents and data, and,
at the FTC's request, both parties certified substantial compliance
with the VALs.
Now that the FTC staff have completed their investigation, the
Parties submit this petition requesting the Commission's approval to
permit the transaction to close before year end. In addition to
enabling the Parties to meet their contractual obligations and
transaction timetable, permitting closing before year end will
eliminate the state of uncertainty that has hung over the Novasep
chromatography equipment business for the past year, further business
deterioration, and the ongoing challenge of retaining critical
employees while the business is in limbo. Furthermore, essential
innovation, including the completion of the development of the SU flow-
path for BioSC-RCC and BioSC, along with necessary software
improvements \35\ and innovative product development for the BioSC
system and other projects cannot be achieved until the transaction has
closed. In the event that approval is not obtained by mid-December,
Novasep likely will be forced to transfer the business back to its
private investor shareholders, in which case the business will operate
with even fewer financial and organizational resources than it has
today.
---------------------------------------------------------------------------
\35\ See NOVA-VAL-0000079; NOVA-VAL-0014556; NOVA-VAL-0018504;
NOVA-VAL-0025513; NOVA-VAL-0027911; NOVA-VAL-0063924; NOVA-VAL-
0063984; NOVA-VAL-0073282; NOVA-VAL-0073557; NOVA-VAL-0075029
(documents discussing software challenges). See also Rebecca H.
Farrington Letters to Lisa DeMarchi Sleigh, dated September 15, 2021
and October 5, 2021.
---------------------------------------------------------------------------
Permitting the transaction to close before year end will enable the
Novasep and Sartorius product development engineers to integrate and
work together as a single team to move forward with product development
and other innovations that cannot be achieved in the Parties'
collaboration. Most importantly, approving the transaction before year
end will ensure that customers and consumers benefit from the
innovation resulting from new product launches and necessary
improvements to existing products, which will be further delayed if the
deal does not close by year end (and very likely will be lost
altogether if the transaction is not approved).
III. The Transaction Is Procompetitive and Will Not Lessen Competition
in Any Relevant Chromatography Market
As the Commission alleged in the Danaher Complaint, ``[t]he
relevant geographic area in which to assess the competitive effects of
the Acquisition [of chromatography equipment] is no narrower than the
United States and may be as broad as the entire world.'' \36\
---------------------------------------------------------------------------
\36\ Danaher Complaint at ] III(6).
---------------------------------------------------------------------------
As described further below, the acquisition of Novasep's HPLC
column and skid assets will not lessen competition because Sartorius
does not manufacture or sell HPLC equipment. Similarly, although
Sartorius and Novasep each manufacture and sell conventional LPLC
columns and skids, Novasep's sales and market share in each of these
products is very small. Finally, the addition of Novasep's LPLC
intensified chromatography system (BioSC) to Sartorius's product
portfolio will be procompetitive because BioSC and Sartorius's BioSMB
systems are complementary, highly differentiated products that meet
distinct customer needs.\37\
---------------------------------------------------------------------------
\37\ The segmentation of approaches to intensified/continuous
LPLC chromatography between single-step and multistep solutions,
demonstrates that customer demand exists for both intensification
approaches, which will incentivize Sartorius to continue innovating
with both BioSC and BioSMB platforms following the transaction.
[REDACTED]. See SART_0000601--SART_0000605 (regarding Sartorius's
plans to continue to support both systems).
---------------------------------------------------------------------------
a. HPLC Columns and Skids
Sartorius's acquisition of Novasep's HPLC equipment fills a gap in
its chromatography equipment portfolio and enhances Sartorius's ability
to compete with incumbent chromatography equipment suppliers
[[Page 64487]]
that offer a full range of HPLC and LPLC equipment. By expanding its
product portfolio, Sartorius will be able to serve customers who prefer
to source their HPLC and LPLC equipment needs from a single supplier
and give them more competitive choices.
Novasep's HPLC equipment will allow Sartorius to offer a complete
range of technologies for both the needs of the biopharma industry and
adjacent pharmaceutical segments. The availability of Novasep's HPLC
offerings alongside LPLC solutions from a single source also will allow
Sartorius to achieve economies of scale and conform control systems
across platforms.
Following the acquisition, Sartorius will have every incentive to
support and enhance Novasep's HPLC equipment. In addition to
purification of small molecule active ingredients and insulin,
Novasep's HPLC equipment is increasingly being used in COVID-19 vaccine
development. For example, Novasep's Hipersep Pilot skid is being used
to purify COVID-19 vaccine components, including the mRNA strands and
lipid nanoparticles that are critical to the vaccines' efficacy. With
its robust global marketing, sales and service infrastructure,
Sartorius will be able to increase sales and penetration of Novasep's
HPLC product lines with new customers and in new applications,
including supporting vaccine producers' efforts to combat the COVID-19
pandemic.
b. Conventional LPLC Columns and Skids
As alleged in the FTC's Danaher Complaint, conventional LPLC column
and skid markets have ``only three significant suppliers'': Danaher, GE
and Merck Millipore.\38\
---------------------------------------------------------------------------
\38\ See Danaher Complaint at ] IV(9); European Commission
Decision at ]] 388, 401.
---------------------------------------------------------------------------
In the case of columns, the FTC ``estimate[d] the combined firm
[i.e., Danaher/GE] would have a market share of greater than 45
percent'' with ``[s]everal fringe firms.'' \39\ In the case of skids,
the FTC estimated that GE was ``the leading supplier of conventional
LPLC skids with over 30 percent market share [and that combined]
Danaher and GE would have an even larger share of the market.'' \40\
---------------------------------------------------------------------------
\39\ Danaher Complaint at ] IV(9).
\40\ Id. ] IV(10).
---------------------------------------------------------------------------
Novasep is one of the ``fringe'' firms that the FTC concluded in
its GE/Danaher investigation had an insufficient market presence to
competitively constrain GE/Danaher in these product areas. Novasep
estimates that its global market share in conventional LPLC columns and
conventional LPLC skids is de minimis (less than [REDACTED] globally
and in the U.S.).\41\ Accordingly, the acquisition by Sartorius would
not risk substantially lessening competition in those products in any
relevant geographic market.
---------------------------------------------------------------------------
\41\ Rebecca H. Farrington Letter to Lisa DeMarchi Sleigh, dated
July 15, 2021 (regarding MU LPLC columns); see also NOVA-000296--
NOVA-000303, at NOVA-000300.
---------------------------------------------------------------------------
c. LPLC Intensified/Continuous Chromatography Systems
Different technologies have been developed to address biopharma
customers' needs for faster, more efficient downstream bioprocessing at
lower cost and bioprocess risk. Sartorius's BioSMB and Novasep's BioSC
systems each provide a form of ``intensified'' chromatography using
distinct technologies that addresses different customer needs.\42\
Customers have different manufacturing strategies and equipment
preferences that, in turn, depend on a number of factors, including the
configuration of their facilities, available and desired footprint,
type of products (e.g., innovator or biosimilar), stage of production
(development, clinical or commercial scale), volumes and mix of
products, efficiencies desired from affinity capture step
intensification versus other chromatography steps, and labor costs.\43\
---------------------------------------------------------------------------
\42\ SART_0016281, at 2 (illustrating the different customer
applications for BioSMB and the Parties' recently launched BioSC-RCC
system based on customer consumable usage strategy, product
development stage, and risk tolerance); SART_0145766 (indicating
that BioSC-RCC is for customers with different preferences or needs
than multi-column chromatography (``MCC'') systems like BioSMB).
\43\ See SART_0000606--SART_0000607, at SART_0000606;
SART_0170114 (illustrating the distinct applications for resin-based
MCC and membrane-based RCC systems based on customer consumable
usage strategies, product development status, and customer risk
tolerance); SART_0115519, at 12 (projecting distinct growth rates
for BioSC, BioSMB, and BioSC-RCC in Sartorius's July 2021 BioSMB
Business Plan).
---------------------------------------------------------------------------
i. BioSMB and BioSC Product Differentiation
BioSMB and BioSC exemplify two distinct approaches to bioprocessing
intensification that have evolved over the past decade:
<bullet> ``Single-step'' intensification of the affinity capture
chromatography step alone.
[cir] Other steps in the chromatography process (the virus
inactivation step and two polishing steps) are achieved using separate
LPLC batch chromatography equipment.
[cir] Commercially available systems using ``single step''
intensification include BioSMB, Cytiva's PCC (now owned by Danaher),
YMC/ChromaCon Contichrom Twin, and Tosoh/Semba ProGMP).
<bullet> ``Multistep'' intensification of all chromatography steps
by integrating each chromatography step in a single system and
continuous process.
[cir] Commercially available systems include BioSC, PAK
BioSolutions, and Sepragen QuantaSep).\44\
---------------------------------------------------------------------------
\44\ Suppliers of multistep systems also include various in-
house systems developed by biopharma companies such as Fujifilm,
Bayer, Boehringer Ingelheim, and Novartis.
---------------------------------------------------------------------------
BioSMB (and other single step systems) are designed to maximize the
productivity of resin at the affinity capture step using a sequential
multi-column chromatography (``S-MCC'') process. BioSMB offers the
greatest efficiencies for customers that make biologic drugs such as
mAbs, which require expensive Protein A resin for purification. Because
BioSMB only performs the affinity capture step, it may be more
attractive to customers who are looking to reduce costs and improve
productivity without replacing their entire downstream bioprocessing
production line. Customers can still generate significant resin savings
and increase productivity by replacing their existing batch LPLC
equipment with BioSMB to perform the affinity capture step without
having to invest in an entirely new production line (and securing the
extensive regulatory approvals that are required to do so).
With its SU flow path technology, BioSMB also is attractive to
customers who prefer not to undertake intensive cleaning and
sterilization of MU equipment between process runs. In particular,
innovator biopharma customers in North America and Europe increasingly
prefer to use disposable SU flow-kits so that they can quickly switch
between process runs for different biologic products without time-
consuming cleaning and sterilization, or risk cross-contamination
between process runs for different drugs.\45\ Some customers explicitly
make SU technology a requirement in their ``request for proposal''
specifications.\46\
[[Page 64488]]
Because BioSC lacks a SU option,\47\ it cannot compete with BioSMB for
these opportunities.
---------------------------------------------------------------------------
\45\ See NOVA-001242--NOVA-001755, at NOVA0001572 (``With
single-use equipment now in routine common use, [biopharma survey]
respondents may be viewing disposable options from more of an
economic vs. technological perspective, particularly eliminating
weeks of manual labor-intensive cleaning and sterilizing stainless
steel equipment.'').
\46\ When intensified chromatography systems were first
introduced to customers as a nascent technology, customers purchased
benchtop/lab scale models for equipment testing and experimentation.
Given the small scale of production and the corresponding relative
ease of changing tubing for SU systems or cleaning the tubing for MU
systems, customers did not necessarily have a strong preference for
SU versus MU flow path technology because there is not necessarily a
significant difference in cost or contamination risks at this scale.
This was the competitive environment the Commission analyzed in its
review of the Danaher-GE transaction. Now that large molecule
innovators are advancing to pilot/process development stage
production, their preference for SU technology has become more
pronounced.
\47\ NOVA-000691--NOVA-000748, at NOVA-000703, NOVA-000707,
NOVA-000730 (``No Single Use skills'').
---------------------------------------------------------------------------
In contrast, BioSC's greatest value to customers is its ability to
continuously perform multi-step, multi-column chromatography (``MS-
MCC'').\48\ Although it is technically capable of performing S-MCC
alone, most customers have placed orders without the S-MCC
configuration because this would eliminate the system's ability to
continuously perform multiple chromatography steps in an MS-MCC
process.\49\ To perform the affinity capture step, MS-MCC typically
uses a simplified, less efficient form of multi-column intensification
or a conventional batch process, which is not as efficient as BioSMB.
BioSC's productivity benefits are largely achieved through the
integration of the entire downstream chromatography process in a single
system using an onboard software suite to coordinate each
chromatography step.\50\ BioSC's integrated system also eliminates time
consuming (and productivity reducing) intermediate steps such as
product storage in holding tanks between chromatography processes that
are required for single-step, standalone systems such as BioSMB.\51\
---------------------------------------------------------------------------
\48\ See Rebecca H. Farrington Letter to Lisa DeMarchi Sleigh,
dated April 26, 2021, at 3-4 (regarding BioSC chromatography
processes).
\49\ Id. at 3. A BioSC system configured for MS-MCC in Novasep's
factory cannot be ``switched'' to the S-MCC process that BioSMB uses
by a customer. Customers must ship the equipment back to the Novasep
factory for modification and, in practice, they have not done so.
Id.
\50\ See SART_0002159--SART_0002187, at SART_0002171.
\51\ See Sartorius BioSMB Technical Discussion Presentation:
Meeting with FTC (Apr. 22, 2021), at 9.
---------------------------------------------------------------------------
BioSC is an attractive option for customers who have the
flexibility to implement a new downstream production line or are
building a new manufacturing facility. BioSC's integrated system
reduces manufacturing footprint by reducing the size (and associated
operational costs) of the sterile ``clean rooms'' required to produce
biologics.\52\ In addition, certain customers may prefer BioSC's MU
technology if, for example, they are producing larger product runs
(e.g., biosimilars), switching between products infrequently, and/or
are located in regions where labor costs for cleaning and sterilization
of MU equipment are lower (e.g., Southeast Asia).\53\
---------------------------------------------------------------------------
\52\ See Rebecca H. Farrington Letter to Lisa DeMarchi Sleigh,
dated April 26, 2021, at 2 (regarding BioSC chromatography
processes).
\53\ See, e.g., NOVA-001210--NOVA-001241; NOVA-001759--NOVA-
001800; NOVA-001756--NOVA001758; NOVA-001191--NOVA-001207.
---------------------------------------------------------------------------
Because BioSMB and Novasep BioSC are highly differentiated products
that provide process intensification in different ways, customers
generally do not view them as close substitutes, particularly at
clinical and manufacturing scales.
ii. BioSC Has Failed To Penetrate the U.S. and Its Global Sales Are
Declining
Since BioSC's launch in 2015, Novasep has sold only a few lab scale
units in the U.S.\54\ To the extent that BioSC Lab sales are viewed as
an indication of potential future BioSC sales at commercial scale,
Novasep lacks an installed base of lab scale equipment to generate
future sales. Novasep has faced challenges convincing customers to
scale up to BioSC's larger (clinical or manufacturing scale systems),
in part because Novasep's product family does not have a simple scale-
up pathway.\55\
---------------------------------------------------------------------------
\54\ Novasep manufactures the BioSC system at three different
scales: Lab, pilot/clinical, and manufacturing. Bioprocesses that
are investigated on BioSC Lab are ``scaled up'' (i.e., increased in
size/volume) to the larger BioSC Pilot system for clinical
development (although BioSC faces challenges when scaling up that
Sartorius plans to address in its redesign of the three scales of
the system), and ultimately to BioSC Manufacturing system for
commercial production.
\55\ See Bates White's CRM Data Analysis Presentation and
exhibits, dated May 26, 2021, at 8.
---------------------------------------------------------------------------
BioSC's lack of sales in the U.S. is attributable to several
challenges that Sartorius is uniquely placed to overcome and to do so
quickly, given its extensive experience working with the BioSC
platform.\56\ First, Novasep does not have an established reputation as
an LPLC supplier and is relatively unknown to the North American
biopharma industry for LPLC. Second, unlike BioSMB, Novasep's BioSC
product family does not provide customers an easily achievable scale-up
pathway because the system architecture of the BioSC lab scale model,
which biopharma customers can use to test the BioSC proof of concept,
differs significantly from that of BioSC Pilot and BioSC M, which are
used for drug development and manufacture.\57\ Third, innovator
biotechnology companies in North America prefer to purchase from
longstanding suppliers that have significant local sales and support
infrastructure. Novasep has only [REDACTED] salespeople and [REDACTED]
service technicians in the U.S. to support all of its HPLC and LPLC
product lines.\58\ In contrast, Sartorius's specialized chromatography
sales and service ``task force'' already includes 11 individuals in the
U.S. supporting its LPLC chromatography products alone, and Sartorius
is planning to expand the team. Fourth, there is an increasing customer
preference in the U.S., particularly at commercial scale, to use SU
flow-path technology (which Novasep does not have).\59\ Fifth, BioSC's
software, which controls and coordinates the MS-MCC process, has
experienced challenges and the system will benefit from Sartorius's
expertise in software and process automation.\60\
---------------------------------------------------------------------------
\56\ See NOVA-000691--NOVA-000748, at NOVA-000738 (Novasep's
customer sales, service, and support infrastructure is
underdeveloped.).
\57\ See NOVA-001208--NOVA-001209 (explaining that BioSC Lab
does not scale up to BioSC Pilot).
\58\ See Novasep's Voluntary Access Letter Response dated
September 17, 2021, at 25.
\59\ See SART_0001180--SART_0001181, at SART_0001180;
SART_0003306 (providing Sartorius' projections of customer
preference for the SU version of BioSC RCC); SART_0168117, at 17
(June 2021 Business Review indicating ``Growth to achieve 2025
driven by steady-increased Multi-Use System and explosive-increased
Single-Use System''); see also NOVA-000872, NOVA-000881 (Budget 2020
BU Process Solutions).
\60\ See, e.g., NOVA-VAL-0000079; NOVA-VAL-0014556; NOVA-VAL-
0018504; NOVA-VAL-0025513; NOVA-VAL-0027911; NOVA-VAL-0063924; NOVA-
VAL-0063984; NOVA-VAL-0073282; NOVA-VAL-0073557; NOVA-VAL-0075029.
---------------------------------------------------------------------------
Despite the potential benefits of the system, the trajectory of
Novasep's BioSC sales over the past several years has been declining
and its sales prospects are unlikely to improve without necessary
investment and improvements that Sartorius is uniquely placed to
provide.\61\ In order to achieve commercial adoption and deliver its
potential benefits to customers, BioSC requires the investment and
innovations that Sartorius is planning to provide once it owns the
platform including, inter alia, updating and redesigning the systems to
a more ``off the shelf'' design and streamlined manufacturing process
at a lower cost, the development of a SU flow-path and software
improvements, as well as the support of Sartorius's U.S. and global
sales and service infrastructure.
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\61\ See F. Schaeffer Letter to Lisa DeMarchi Sleigh, dated July
9, 2021, at 3 (regarding BioSC scale up and sales).
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[[Page 64489]]
iii. BioSMB and BioSC Virtually Never Compete Head-to-Head
Because BioSMB and BioSC utilize different technologies and
approaches that meet different customer needs, there has been very
little head-to-head competition between them since their lab scale
systems were launched. Indeed, the Parties have identified only one
instance of BioSMB and BioSC pursuing the same opportunity at
commercial (i.e., clinical or manufacturing) scale. This was an
opportunity to sell to a potential customer located outside of the
U.S., which neither company won.
Because BioSMB and BioSC are highly differentiated products that
are very rarely in direct competition in new sales opportunities,\62\
there is no practical risk of unilateral price effects from the
acquisition.\63\ The Parties' win/loss data confirms that BioSMB and
BioSC virtually never compete directly \64\ and that any attempted
unilateral price increase for either product post-merger would be
unprofitable.\65\
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\62\ ``In differentiated product industries, some products can
be very close substitutes and compete strongly with each other,
while other products are more distant substitutes and compete less
strongly. . . . The extent of direct competition between the
products sold by the merging parties is central to the evaluation of
unilateral price effects.'' Dep't of Just. & Fed. Trade Comm'n,
Horizontal Merger Guidelines Sec. 6.1 (2010) [hereinafter
Horizontal Merger Guidelines].
\63\ ``Unilateral price effects are greater, the more the buyers
of products sold by one merging firm consider products sold by the
other merging firm to be their next choice. The Agencies consider
any reasonably available and reliable information to evaluate the
extent of direct competition between the products sold by the
merging firms. This includes documentary and testimonial evidence,
win/loss reports and evidence from discount approval processes,
customer switching patterns, and customer surveys.'' Id.
\64\ See Bates White's CRM Data Analysis Presentation and
exhibits, dated May 26, 2021, at 8.
\65\ ``A merger between firms selling differentiated products
may diminish competition by enabling the merged firm to profit by
unilaterally raising the price of one or both products above the
pre-merger level. Some of the sales lost due to the price rise will
merely be diverted to the product of the merger partner and,
depending on relative margins, capturing such sales loss through
merger may make the price increase profitable even though it would
not have been profitable prior to the merger.'' Horizontal Merger
Guidelines at Sec. 6.1.
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iv. Sartorius Must Continue To Offer Multiple Platforms and Innovate To
Displace Incumbent Batch LPLC Suppliers and Meet Increasing Process
Intensification Competition
Sartorius views the acquisition of the multistep BioSC system as
filling a gap in its chromatography portfolio to meet customer demand
for an integrated continuous chromatography system that BioSMB's
single-step system does not provide. Sartorius has forecast distinct
customer demand (and growth rates) for both BioSMB and BioSC
platforms.\66\
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\66\ See SART_0115519, at 12 (projecting distinct growth rates
for BioSC, BioSMB, and BioSC-RCC in Sartorius's July 2021 BioSMB
Business Plan); SART_0000601--SART_0000605 (regarding Sartorius's
plans to continue to support both platforms).
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Sartorius has already made investments in the BioSC-RCC and BioSMB
platforms.\67\ Once the transaction is approved, Sartorius will be able
to make necessary investments in BioSC to make it a commercially
attractive option for customers. As a new entrant in the chromatography
equipment business, Sartorius needs to overcome the incumbency
advantages of the dominant batch LPLC chromatography equipment
suppliers by convincing customers that it is worth replacing their
legacy batch systems with superior Sartorius equipment. Sartorius has a
better prospect of convincing customers across the board to make the
switch if it can offer multiple options for intensification in a range
of systems and approaches that meet different customer priorities and
needs.
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\67\ Sartorius also completed an extensive, in-house sales
training program and launched a marketing campaign in March 2021 to
promote the BioSMB system to prospective customers whom it had
identified might be interested in moving from conventional batch
processing to a continuous chromatography system. See generally
SART_0016472.
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The Proposed Transaction also will combine Sartorius's and
Novasep's complementary technologies, know-how, and engineering
expertise that will accelerate the development of next generation
systems and innovations, and meet escalating competition in intensified
chromatography processing.\68\ Intensification of downstream processing
is a strategic focus of biopharma companies, which have an increasing
number of competitive options through their own product development
efforts, as well as strategic combinations and investments by their
supplier base:
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\68\ See Horizontal Merger Guidelines Sec. 6.4 (``The Agencies
also consider whether the merger is likely to enable innovation that
would not otherwise take place, by bringing together complementary
capabilities that cannot be otherwise combined or for some other
merger-specific reason.'').
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Tosoh/Semba: In January 2019, Tosoh Corporation increased its
investment in U.S.-based Semba Biosciences, Inc. in pursuit of its goal
to become a full range solutions provider for biopharma
purification.\69\ The investment enhanced Semba's ability to market and
innovate with its SU lab and process development scale LPLC continuous
chromatography systems, and Tosoh's scale and resources, which include
a significant resins business, allowed it to commercialize its first
commercial scale SU LPLC continuous chromatography system this
year.\70\
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\69\ Tosoh Corporation Invests in Semba Biosciences, Inc., Tosoh
(Jan. 10, 2019), <a href="https://www.tosoh.com/news-press/news-releases/2019/tosoh-corporation-invests-in-semba-biosciences-inc">https://www.tosoh.com/news-press/news-releases/2019/tosoh-corporation-invests-in-semba-biosciences-inc</a>.
\70\ New ProGMP 150 System, Semba Biosciences, <a href="https://sembabio.com/progmp-150-system/#1617729557380-f5d67fe8-6d6a">https://sembabio.com/progmp-150-system/#1617729557380-f5d67fe8-6d6a</a> (last
visited Oct. 22, 2021).
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YMC/ChromaCon: In April 2019, YMC Co., Ltd. acquired ChromaCon AG,
a manufacturer of LPLC continuous chromatography systems.\71\ As a
result, ChromaCon has been able to leverage YMC's expertise in resin
and packed columns to enhance its lab, pilot, and commercial scale LPLC
continuous chromatography systems.\72\ In July 2020, the U.S. Food and
Drug Administration purchased a ChromaCon LPLC continuous
chromatography system for evaluation, signaling its interest and
confidence in ChromaCon's equipment.\73\
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\71\ YMC Acquires Chromacon, ChromaCon (Apr. 9, 2019), <a href="https://www.chromacon.com/en/news/ymc-acquires-chromacon">https://www.chromacon.com/en/news/ymc-acquires-chromacon</a>.
\72\ Contichrom TWIN--GMP Scale-up equipment, ChromaCon, <a href="https://www.chromacon.com/en/products/gmp-scale-up-equipment">https://www.chromacon.com/en/products/gmp-scale-up-equipment</a> (last visited
Oct. 22, 2021).
\73\ FDA selects twin-column chromatography system by YMC
ChromaCon for evaluation, ChromaCon (July 2020), <a href="https://www.chromacon.com/resources/public/lava3/media/kcfinder/files/FDA%20orders%20Twin%20Column%20Chromatography%20of%20YMC%20Press%20Release%2007F2020.pdf">https://www.chromacon.com/resources/public/lava3/media/kcfinder/files/FDA%20orders%20Twin%20Column%20Chromatography%20of%20YMC%20Press%20Release%2007F2020.pdf</a>.
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Sepragen: Sepragen, a U.S.-based firm, offers a complete product
portfolio including resins, columns, and MU and SU chromatography
systems at lab, pilot, and commercial scales.\74\ Sepragen has
developed and sold MU LPLC continuous chromatography systems and
recently added a lab scale chromatography system with a SU flow path to
its product portfolio.\75\
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\74\ Products Overview, Sepragen, <a href="https://www.sepragen.com/Products.html">https://www.sepragen.com/Products.html</a> (last visited Oct. 22, 2021).
\75\ QuantaSep Single Use, Sepragen, <a href="https://www.sepragen.com/Products-Chromatography-Systems-Single-Use.html">https://www.sepragen.com/Products-Chromatography-Systems-Single-Use.html</a> (last visited Oct.
22, 2021).
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Repligen/ARTeSYN: In October 2020, Repligen Corporation announced
its acquisition of ARTeSYN Biosolutions.\76\ ARTeSYN produces
engineered-to-order (``ETO'') SU continuous chromatography systems at
different
[[Page 64490]]
scales, which Repligen is now actively marketing.\77\ As a leading
resin supplier to biopharma companies in the U.S. and globally,
Repligen has the financial resources and customer relationships to
commercialize and improve ARTeSYN's continuous chromatography
technology. For example, Repligen produces pre-packed columns, which
are well suited to ARTeSYN systems. Repligen plans to continue
developing ARTeSYN's single-use solutions as part of its portfolio.
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\76\ Repligen Corporation Announces Agreement to Acquire
Bioprocess Systems Innovator ARTeSYN Biosolutions and Completes
Acquisition of Non-Metallic Solutions, Repligen (Oct. 27, 2020),
<a href="https://repligen.q4ir.com/news/news-details/2020/Repligen-Corporation-Announces-Agreement-to-Acquire-Bioprocess-Systems-Innovator-ARTeSYN-Biosolutions-and-Completes-Acquisition-of-Non-Metallic-Solutions/default.aspx">https://repligen.q4ir.com/news/news-details/2020/Repligen-Corporation-Announces-Agreement-to-Acquire-Bioprocess-Systems-Innovator-ARTeSYN-Biosolutions-and-Completes-Acquisition-of-Non-Metallic-Solutions/default.aspx</a>.
\77\ ARTeSYN Chromatography Systems, Repligen, <a href="https://www.repligen.com/technologies/engineered-systems/chromatography-systems#collapse1-2">https://www.repligen.com/technologies/engineered-systems/chromatography-systems#collapse1-2</a> (last visited Oct. 22, 2021).
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Merck Millipore: Merck Millipore is leveraging a platform called
BioContinuum to provide a form of intensified processing using
chromatography equipment based on the company's ``Mobius'' concept.
Merck Millipore has announced a collaboration in intensified downstream
processing with Transcenta (formerly Just Bio).\78\
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\78\ MilliporeSigma and Transcenta Collaborate to Advance
Continuous Biomanufacturing, Make the `Facility of the Future' a
Reality, MilliporeSigma (Nov. 7, 2020), <a href="https://www.emdmillipore.com/US/en/20201106_153338?bd=1">https://www.emdmillipore.com/US/en/20201106_153338?bd=1</a>.
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PAK BioSolutions: PAK BioSolutions is a new, U.S.-based,
chromatography equipment entrant that was founded in 2018. In 2021, PAK
introduced a SU pilot scale multistep intensified chromatography system
that can perform MS-MCC in a manner similar to BioSC.\79\
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\79\ The PAK System, PAK BioSolutions, <a href="https://www.pakbiosolutions.com/the-pak-system/">https://www.pakbiosolutions.com/the-pak-system/</a> (last visited Oct. 22,
2021).
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In sum, competition in LPLC continuous chromatography systems and
intensified processing approaches has significantly increased since the
Danaher-GE transaction.\80\ Larger players are investing in smaller
competitors and developing their own products, and customers continue
to develop their own in-house solutions.\81\
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\80\ SART_0009787--SART_0009826, at pp. 11-12 (comparing BioSC
to PAK BioSolutions, a ``[n]ew entrant . . . offering SU equivalent
to BioSC,'' and identifying biopharma companies developing systems
in-house and noting that more biopharma companies are utilizing
multistep processes).
\81\ MilliporeSigma and Transcenta Collaborate to Advance
Continuous Biomanufacturing, Make the `Facility of the Future' a
Reality, (Nov. 7, 2020), MilliporeSigma, <a href="https://www.emdmillipore.com/US/en/20201106_153338?bd=1">https://www.emdmillipore.com/US/en/20201106_153338?bd=1</a>.
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Following the transaction, Sartorius will continue to face
competition from a range of intensified LPLC system suppliers
including:
<bullet> At least six, well-capitalized suppliers that are actively
marketing products in the chromatography intensification space: Danaher
(Cytiva), Tosoh/Semba, YMC/ChromaCon, Sepragen, Repligen/ARTeSYN, and
PAK BioSolutions;
<bullet> incumbent batch LPLC equipment suppliers, such as Merck
Millipore, which are entering the space;
<bullet> emerging Chinese suppliers, such as Lisure Science; and
<bullet> customers who are continuing to develop their own
intensification technologies in-house.
Intensified/continuous chromatography is an emerging area with a
range of technologies. No single approach has achieved broad adoption
at this time. To achieve commercial success, Sartorius will need to
continue to innovate and demonstrate greater efficiencies to convince a
critical mass of customers to adopt its products in place of incumbent
conventional LPLC batch systems and other competing intensification
solutions. The proposed acquisition will enhance Sartorius's ability to
continue to successfully innovate in this growing and increasingly
competitive field and to develop next generation solutions to meet
industry needs for cost-effective, biologic drug development and large-
scale production.
IV. If the Proposed Acquisition Is Not Approved, the Parties' Existing
and Future Innovations Will Be Lost and Customers and Consumers Will Be
Harmed
In developing BioSC-RCC, the Parties have created a unique new
product--a membrane-based intensified chromatography system that
employs RCC as an alternative to resin-based systems.\82\ The product
is still in the testing phase and no sales have been made as yet.
Sartorius has concluded that it needs to develop and launch a BioSC-RCC
system with a SU flow-path option for the BioSC-RCC concept to achieve
commercial success. A SU option would be preferred by many customers
who are concerned about maintaining purity and low bioburden risk,
while achieving quick turnaround times between batches.\83\ However,
Sartorius has no incentive to invest in this innovation without any
right to manufacture or market the system. Developing and launching
BioSC-RCC with a SU option will not be feasible unless Sartorius is
able to acquire the Novasep equipment business.
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\82\ Membrane capsules and cassettes are an emerging technology
that offer the potential for greater production efficiencies than
conventional resin-based chromatography systems. See SART_0002159--
SART_0002187, at SART_0002173 (comparing projected customer cost
savings of BioSC-RCC to GE/Cytiva's conventional LPLC batch
equipment).
\83\ See SART_0000487--SART_0000498, at SART_000498;
SART_0003206 (indicating Sartorius's expectation that BioSC-RCC
would displace less-efficient, traditional batch equipment, notably
GE/Cytiva's dominant conventional LPLC batch equipment and providing
Sartorius' projections, showing sales of the SU version of BioSC-RCC
exceeding the MU version over time); see also SART_0003306;
SART_0168117, at 17.
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If Sartorius were unable to acquire Novasep's chromatography
equipment business, the innovations achieved by the collaboration are
unlikely to be successfully commercialized and planned innovations,
such as the BioSC-RCC SU version, will not be achieved. If the sale of
the business to Sartorius is not approved, it would be transferred to
Novasep's private investor shareholder until it could be divested.
Uncertainty over the future ownership of the business would stall
further investment and development by both Sartorius and the Novasep
chromatography equipment team (which already is operating with
significant resource constraints). The fruits of the Parties'
collaboration would be lost and ultimately the collaboration would end.
Furthermore, if the Proposed Transaction does not close before year
end, the business would be transferred to NVHL S.A., which would risk
business deterioration and attrition of critical employees. The further
uncertainty that would result from a transfer of the business to NVHL
S.A. would risk employee attrition with further adverse business
impacts. It would also undermine customers' confidence in the Novasep
equipment business and its ability to support long-term investments in
its equipment. In particular, biopharma customers, who prioritize
security of supply and long-term business continuity when making
equipment purchasing decisions, understandably would be reluctant to
invest in Novasep equipment while the business' ownership and future
remains uncertain. Thus, in addition to depriving the business of the
resources needed to invest in, market, and sell its products that its
acquisition by Sartorius would provide, this standalone scenario would
likely lead to a reduction of revenue further undermining the
competitiveness and prospects for the business.
Once the transaction is approved, Sartorius will be able to
progress its planned investments in BioSC, including development of a
SU flow-path, redesign of the BioSC family so that it scales up easily
and without extensive and costly revalidation studies, redesign of the
current ETO BioSC M system as an off-the-shelf system to improve
customer delivery
[[Page 64491]]
times,\84\ and redesign of BioSC's software, which has been unreliable
and rendered some systems inoperable.\85\ The Proposed Transaction will
allow these innovations to be achieved and will accelerate product
development by enabling each company's engineering personnel to work
together under one roof \86\ with a unified and stronger strategic
focus on developing these products more quickly and cost-
effectively.\87\
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\84\ The average time from order to delivery for a BioSC system
is significantly longer than for a BioSMB system, in part because
Sartorius has a superior manufacturing process and efficiencies, and
many of Novasep's products are manufactured on an ETO basis, which
is more costly and time-consuming. SART_0000464--SART0000471, at
SART0000468; see also SART_0001130--SART_1177, at SART_0001142
(regarding Sartorius's plans for significant additional investment
in product development); id. at SART_0001151 (regarding Sartorius's
acquisition business case, which includes a multiyear investment in
the development of BioSC M).
\85\ See Why Novasep is Not a Competitive Constraint--White
Paper Prepared for the U.S. Federal Trade Commission, dated June 4,
2021, at 17, n.25 (regarding BioSC software challenges).
\86\ See SART_0001130--SART_0001177, at SART_0001136;
SART_0002571--SART_0002591, at SART_0002576 (outlining Sartorius'
integration plans, including highlighting the creation of a
centralized research and development site as ``priority #1'' as it
will benefit from ``automation expertise for [the] full
chromatography portfolio,'' the ``use of existing supplier network/
cooperation partner--short distances (250km radius) to established
suppliers/sub-contractors of BioSMB/Allegro systems,'' ``[c]lose
collaboration with French [Sartorius] colleagues in Aubagne for
single-use systems,'' and the ``[o]pportunity to hire former Pall
people because of close proximity to Dreieich'').
\87\ Although Sartorius's research and development plans confirm
that it intends to do much more than maintain the status quo for
Novasep's products, Sartorius also made specific guarantees to
maintain and invest in Novasep at least at current levels for a
three-year period in connection with French foreign investment
approval, which demonstrates its commitment to Novasep's
technologies and employees. See Andrew S. Wellin Letter to Lisa
DeMarchi Sleigh, dated July 1, 2021 (regarding Sartorius's
commitments in connection with French foreign investment approval of
the Proposed Transaction).
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Combining Sartorius and Novasep technologies, IP, engineering
personnel, and know-how also will accelerate innovation in the BioSMB
product line. Planned innovations include value-engineering BioSMB's SU
flow-kits to reduce their cost, developing BioSMB-specific applications
data for additional types of therapies, and line extensions, such as
the planned, [REDACTED].\88\
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\88\ See SART_0000487--SART_0000498, at SART_0000496;
SART_0009752, at SART_0009754-55 (illustrating Sartorius'
development plans for BioSMB); SART_0153310, at 14 (listing ongoing
BioSMB PD improvement projects).
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The Proposed Transaction will ensure that Novasep's products are
effectively manufactured, marketed, and supported by an innovative
supplier with the infrastructure that biopharma customers rely on to
make long-term capital investments in these products. With the support
of Sartorius's global manufacturing, supply chain, sales, and service
infrastructure,\89\ customers will have the confidence to purchase
Novasep equipment as a long-term capital investment. All of these
benefits will be particularly pronounced in the U.S., where Novasep has
been unable to successfully commercialize BioSC or its other LPLC
product lines.
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\89\ Currently, Sartorius has 306 sales and service employees in
the BPS organization. Following the closing of the Danaher/Pall
divestiture, Sartorius created a 20-person chromatography ``task
force'' dedicated solely to chromatography sales with a special
focus on intensified/continuous chromatography equipment. Over half
of Sartorius's chromatography task force is located in the U.S.
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V. Request for Confidential Treatment
This petition, including its related documents, contains certain
confidential and competitively sensitive business information relating
to Sartorius, Novasep, and the Proposed Transaction. Disclosure of such
confidential information may prejudice Sartorius and Novasep, and cause
harm to the ongoing competitiveness of both companies. Pursuant to
Sections 2.41(f)(4) and 4.9(c) of the FTC's Rules of Practice and
Procedure,\90\ Sartorius has redacted such information from the public
version of this application, and requests confidential treatment for
such redacted information under Section 4.10(a)(2) of the FTC's Rules
of Practice and Procedure \91\ and Sections 552(b)(4) and (b)(7) of the
Freedom of Information Act.\92\ In the event that a determination is
made that any material marked as confidential is not subject to
confidential treatment, Sartorius requests that the FTC provide prompt
notice of that determination and adequate opportunity to appeal such a
decision.
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\90\ 16 CFR 2.41(f)(4) and 4.9(c).
\91\ 16 CFR 4.10(a)(2).
\92\ 5 U.S.C. 552(b)(4), 552(b)(7).
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Respectfully submitted,
/s/Fiona A. Schaeffer
Fiona A. Schaeffer,
Andrew S. Wellin,
MILBANK, LLP, 55 Hudson Yards, New York, NY 10001.
Counsel for Sartorius Stedim Biotech, S.A.
Dated: October 28, 2021.
[FR Doc. 2021-25150 Filed 11-17-21; 8:45 am]
BILLING CODE 6750-01-P
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</html>Indexed from Federal Register on November 18, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.