In September 2009 the Chinese Ministry of Commerce (MOFCOM) granted conditional approval to the merger of Pfizer and Wyeth, two pharmaceutical giants, with the condition that Pfizer divest its swine flu vaccine business in China. This conditional approval represented the first instance of MOFCOM ordering a foreign company to divest itself of a China-based business in order to win approval of a merger.
Earlier this month, in order to comply with MOFCOM¡¯s order to divest, Pfizer sold its swine flu vaccine business to Harbin Pharmaceutical Group, the largest pharmaceutical company in China. It acquired the swine flu business from Pfizer for a reported US$50 million, beating out bids from Novartis, Eli Lilly, Boehringer Ingelheim, and Agenix Biopharma.
Harbin¡¯s purchase of the business from Pfizer will give it the largest market share in the sector, and also access to all of Pfizer¡¯s required intellectual property. However, the required IP includes only the information necessary to produce the vaccine in China, though there may be trade secrets and proprietary information required to work the technology that applies to Pfizer¡¯s business worldwide. Under Chinese law, Pfizer will have to guarantee a complete, accurate transfer of the associated technology in order to completely divest this branch of its company. This untangling of the requisite IP could present an arduous task for Pfizer, and it remains to be seen if any litigation will come from the exchange of trade secrets and confidential information between the two companies.