Takeda Pharmaceutical has received a conditional approval from the European Commission (EC) for the $62bn proposed acquisition of Irish biopharmaceutical company Shire.

The EC clearance is conditional on the companies addressing the future potential overlap in the area of inflammatory bowel diseases (IBD) between Takeda’s Entyvio and Shire’s pipeline compound SHP647.

The condition requires the companies to divest SHP647 and certain associated rights.

Takeda noted that SHP647, which is under development, is expected to attract interest from several potential buyers.

The company also stated that it remains committed to Entyvio, which is regarded as the ‘cornerstone’ of its speciality gastrointestinal portfolio.

“We are optimistic that our shareholders recognise the significant long-term value creation potential of this powerful combination.”

Entyvio is used for the treatment of patients with moderately to severely active ulcerative colitis (UC).

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Takeda Pharmaceutical president and CEO Christophe Weber said: “We are very pleased to have secured clearance from the European Commission, the final regulatory approval required to proceed with our acquisition of Shire.”

“We are another step closer to creating a global, values-based, R&D-driven biopharmaceutical leader, and after several months of constructive dialogue, we are optimistic that our shareholders recognise the significant long-term value creation potential of this powerful combination.”

EC’s investigation focused on treatments for IBD, and specifically on biologic treatments for the disease.

The commission expressed concerns that the transaction would lead to a loss of innovation and a reduction in potential future competition due to the overlap.

According to the agency, Entyvio and SHP647 could have close competition and offer patients with an opportunity to have biologic treatments at reduced prices.

However, based on the investigation, the EC found that Takeda would be unlikely to continue developing SHP647. It was due to these concerns that the regulator placed the divestment condition on the acquisition.

The transaction was previously approved by several regulatory authorities, including the US Federal Trade Commission, the Japan Fair Trade Commission, the State Administration for Market Regulation in China and the Brazilian Administrative Council for Economic Defense.

The combined company is anticipated to have greater scale and efficiencies, as well as improved R&D productivity.