CADE recommends conditional clearance of Novamed’s acquisition of Medley

On 4 November, the Office of the Superintendent General at CADE (SG) recommended the conditional clearance of the acquisition of Medley Farmacêutica Ltda., a subsidiary of the French group Sanofi, by Novamed Fabricação de Produtos Farmacêuticos Ltda., a member of the Grupo EMS. 

The transaction was subject to the signing of an agreement to mitigate competition risks and forwarded to the Tribunal of CADE for a final decision.

The transaction involves Novamed acquiring 100% of Medley’s share capital, including its portfolio of pharmaceutical products, brands, intellectual property rights, and two manufacturing facilities located in Campinas, in the state of São Paulo.

Novamed is a Brazilian pharmaceutical company specialising in the development and manufacture of generic and similar medicines. Medley, On the other hand, develops, manufactures, and distributes pharmaceutical products in Brazil, focusing primarily on generic medicines. The acquisition will enable the Grupo EMS to expand its operations in this sector.

Competition Analysis

The investigation identified horizontal overlaps between the companies’ activities in the domestic market for the manufacture and sale of pharmaceutical products for human use. The SG examined 120 relevant market scenarios, considering different therapeutic classes and the distinction between retail and non-retail sales channels. 

Of these, 70 cases met the conditions for approval under the summary procedure, whilst the remaining 50 required more in-depth analysis.

The assessment also considered the companies’ market shares, the conditions for new competitors to enter the market, available production capacity, as well as the rivalry between pharmaceutical companies.

The SG identified barriers to entry, relating mainly to regulatory requirements, the need for production scale, and the composition of pharmaceutical portfolios. In addition, it was also noted that new competitors do not enter the market quickly enough to mitigate any competition concerns. 

Despite these characteristics, CADE concluded that there is sufficient competition to prevent the applicants from exercising market power in most of the markets analysed.

Competition Concerns

However, the analysis identified two retail markets where the remaining rivalry would be insufficient to mitigate the risks: gonadotropins and other ovulation stimulants (ATC3 G03G0), and selective serotonin agonists for migraine treatment (ATC4 N02C1).

In the first market, which includes the clomifene citrate medicine Clomid, the parties account for more than 90% of sales by volume. The SG/CADE found no competing suppliers of pharmaceutical products containing the same active ingredient and no new entrants to that market over the past five years.

In the anti-migraine medicines market, which includes naratriptan hydrochloride, the parties' combined share would be 50–60% by sales volume. The review identified only one competitor capable of effectively challenging the parties in this market. It also found that Medley was the sole successful new entrant during the period assessed.

The SG concluded that competitors in both markets lacked sufficient spare capacity to absorb an immediate shift in demand if prices rose after the acquisition. Therefore, without remedies, the acquisition could weaken competitive pressure and make it more likely that the parties would exercise market power.

Antitrust remedies

Following those concerns, the SG/CADE classified its review as complex in September 2026 and ordered further investigation into market entry and rivalry in the two markets. The parties then voluntarily proposed a merger control agreement to address the acquisition's potential anticompetitive effects.

The SG concluded that the proposed structural remedy satisfies the proportionality, timeliness, feasibility, and verifiability principles in CADE's Guide to Antitrust Remedies. Under the proposal, the divestiture of a business to be operated by an independent third party would preserve competitive conditions in the affected markets.

The SG considered the proposed measures sufficient to address the potential harm to competition, allowing the transaction to proceed if the parties fulfil their commitments.

Referral to the Tribunal

In light of its findings, the SG/CADE formally challenged the merger and recommended its approval subject to the signature of the agreement. The transaction will be assigned to a commissioner for review before the full panel of the Tribunal decides whether to approve it and, if so, under what conditions.

Access Case No.08700.004966/2026-88