Ayala Corp. arm’s retail drugstore chain purchase reviewed on competition concern
THE Philippine Competition Commission (PCC) said it will conduct a “more detailed” review of the proposed acquisition by Ayala Corp.’s pharmaceutical arm of a Northern Luzon drugstore chain after the competition watchdog discovered “potential” competition concerns in the retail sale of pharmaceutical and non-pharmaceutical products in the region.
In a statement on Tuesday, the competition watchdog reported that an initial data-gathering by PCC Mergers and Acquisitions Office (MAO) under its Phase 1 review pointed to “potential competition concerns” across 28 localities in Northern Luzon.
With this, PCC said its mergers and acquisitions arm recommended opening a Phase 2 review which requires conducting a “more detailed and extensive assessment” on whether the transaction may lead to a “substantial lessening” of competition in the relevant markets.
AHCHI Pharma Ventures Inc. (Ayala Pharma Ventures), which operates Generika Drugstore and North Luzon-based pharmaceutical firm Joleco Resources, which operates St. Joseph Drugstore, notified PCC last January 13 of their proposed transaction, which would involve Ayala Pharma Ventures acquiring a 49-percent share in Joleco Resources.
In December, Ayala Healthcare Holdings Inc. (AC Health) announced having acquired a minority stake in Joleco Resources Inc., which operates stores under the name “Saint Joseph Drug.”
Established in 1958 by Dagupan City-based pharmacist Jose Cruz and wife Leila Lagman, Joleco has grown Saint Joseph Drug from a modest provincial drugstore, with three employees and a 3.5-meter storefront, into a leading regional pharmaceutical chain spanning over 112 stores across Northern Luzon.
AC Health President and CEO Paolo Maximo F. Borromeo said in December that the addition of Saint Joseph Durg to AC Health’s portfolio “is in line with our commitment to enhance accessibility and affordability of healthcare for Filipinos nationwide.”
“Saint Joseph Drug, alongside our existing retail pharma brand, Generika Drugstore, will expand our capacity and footprint to distribute quality and affordable medicine to our countrymen,” they also noted.
For his part, Joleco Chairman, President and CEO Socorro Dorotea L. Cruz expressed “enthusiasm” about the partnership.
“This partnership with AC Health marks a significant milestone in Saint Joseph Drug’s journey. We are proud to have established Saint Joseph Drug as a household name in Northern Luzon over the years, and we look forward to broadening our reach with AC Health,” Cruz said.
AHCHI Pharma serves as the holding company for AC Health’s pharmaceutical businesses that are composed of Generika Drugstore, I.E. Medica and Medethix, its pharmaceutical-goods importation and distribution arms. (See: https:// businessmirror.com.ph/2023/12/22/ ayala-buys-minority-stake-in-pharmafirm/) The PCC said that as the PCC clearance is still being processed, the transaction remains proposed for now.
Under the Philippine Competition Act of 2015, the PCC is mandated to review mergers or acquisitions to ensure that “these deals will not substantially lessen competition in the relevant markets and harm consumer welfare.”