In a statement, the Philippine Competition Commission (PCC) announced that an initial analysis by its mergers and acquisitions (M&A) office found “potential competition concerns” should the 49 percent purchase by Ayala’s Generika Drugstore push through.
Generika is one of the country’s biggest drugstores with a footprint of over 750 stores.
The PCC will pursue a more in-depth Phase 2 review. This will involve an “extensive assessment on whether the transaction may lead to a substantial lessening of competition in the relevant markets”.
Ayala, the nation's oldest conglomerate, previously identified healthcare as a major “growth engine”.
Its integrated portfolio includes healthcare apps and services, the country’s first dedicated cancer hospital in Taguig and drugstores.
Ayala is using a combination of organic growth and acquisitions, the latter being ideal for business groups seeking to grow faster.
The PCC’s review will test the limits of how fast the conglomerate can grow using M&As.
Last December, Ayala said it would buy the 112-store St. Joseph Drug, which was established in 1958 by pharmacist Jose “Pepe” Cruz and his wife Leila Lagman of Dagupan City in the Ilocos Region.
St. Joseph’s large network will give Ayala’s Generika a large footprint in the region without having to invest time and additional resources to build up its own network through organic expansion.
The PCC’s initial assessment, however, found that competition might be lessened in 28 localities in the Ilocos Region and Cordillera Administrative Region.
The PCC has the power to review and even halt acquisitions should such deals result in significantly lessening competition, thus harming consumers.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
