Economy

AbbVie to buy Botox maker Allergan in $63 billion deal

AbbVie to buy Botox maker Allergan in $63 billion deal”

AbbVie is facing the expiration of patent protection for Humira, which brought in a staggering $20 billion in sales past year.

Put another way: "AbbVie has near-term growth but faces a cliff, or more like a canyon, problem with the loss of Humira to [generic] biosimilars in the USA beginning mid-2023 while Allergan... has struggled to generate growth but doesn't face any key near-term exclusivity loss", wrote Raymond James analyst Elliot Wilbur in a research note. AbbVie said Tuesday it will pay $120.30 in cash and a portion of its stock for each Allergan share.

AbbVie Chairman and CEO Richard Gonzalez told analysts Tuesday that the deal essentially involves Humira "buying the assets that replace it over the long term".

Allergan remains an industry leader in aesthetics, and is likely to be the cornerstone of AbbVie's valuation, SVB Leerink analyst Geoffrey Porges said in a note. Two Allergan board members will join AbbVie's board, including Allergan CEO Brent Saunders.

Investors have also questioned Saunders' growth plans beyond acquisitions and the quality of the company's drug pipeline. Allergan rose 33 percent to US$172 in pre-market trading in the USA early Tuesday.

Wilbur went on to state that AbbVie's expected role as "the key R&D decision maker" could present several advantages, including "accelerated investment behind Botox therapeutics as well as simply better pipeline decision making than what Allergan management has demonstrated in the past".

The deal, which comes months after Bristol-Myers Squibb Co agreed to buy Celgene Corp in a $74 billion transaction, will redomicile Dublin-based Allergan to the United States. Including debt, the deal values Allergan at $83 billion.

AbbVie's offer price is a far cry from Pfizer's all-stock offer for Allergan that valued the Ireland-based drugmaker at $363.63 per share in 2015.

Fast forward to Tuesday, where AbbVie's intraday move wiped out as much as $18.4 billion in market value, more than the value ascribed to all but nine companies in the closely-watched Nasdaq Biotech Index.

Gonzalez said AbbVie examined Allergan's portfolio "product by product" and was particularly impressed with the job Allergan has done with Botox.



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