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Reuters: Drugmaker AbbVie Inc. said on Tuesday it would acquire Allergan Plc for about $ 63 billion, giving AbbVie control over the lucrative wrinkle treatment Botox and buying time to seek new growth before its blockbuster arthritis treatment Humira loses US patent protection.
AbbVie has long been under pressure to diversify its portfolio and its shares have lost more than a third of their value since January 2018 over concerns about Humira.
The world’s top-selling drug brought in sales of $ 20 billion last year. But it now faces competition from cheaper versions in Europe and a 2023 expiration of its patents in the United States, by far the most profitable market.
AbbVie Chief Executive Richard Gonzalez said the company was able to buy Allergan because of the massive amount of cash that Humira generates. A US corporate tax overhaul under the Trump administration, which helped companies bring back revenue earned overseas, also helped, he said.
“Humira is buying the assets that replace it over the long term,” said Gonzalez, who plans to lead the combined company and remain chairman and CEO through 2023.
Chief among those assets is Allergan’s Botox, a purified form of botulinum toxin that paralyzes muscles, smoothing frown lines and wrinkles in the forehead and around the eyes. The injection is also approved to treat chronic migraine headaches, overactive bladder and other medical uses.Botox had 2018 sales of about $ 3.6 billion, with $ 1.55 billion coming from cosmetic uses. When used as a cosmetic treatment, patients must pay for Botox out of pocket, buffering it from the pricing pressure that health insurers and government health agencies have put on prescription medicines.
AbbVie sees particular opportunity in the aesthetics market, which Gonzalez described as “highly underpenetrated” and primed to double by 2025, driven by increasing use by younger consumers looking to head off wrinkles before they start.
In addition, Gonzalez said he does not expect a biosimilar version of Botox “for a long, long time, if ever.”Both therapeutic and cosmetic Botox are expected to keep growing, with analysts forecasting total 2019 sales of $ 3.9 billion and reaching nearly $ 6 billion by 2025, according to Refinitiv data.
“We believe the increasing concern about AbbVie’s growth potential following the US Humira biosimilar competition in 2023 will be partially alleviated with the increased portfolio of assets that Allergan brings,” said Morningstar analyst Damien Conover.The deal, coming months after Bristol-Myers Squibb Co agreed to buy Celgene Corp for $ 74 billion, also highlights renewed interest in major acquisitions by the pharmaceutical industry.
