Humira contributed nearly 60% of AbbVie's $32.8 billion in sales a year ago, but the company will face competition in 2023 when lower-priced versions go on sale in the U.S. In a statement, AbbVie CEO Richard A. Gonzalez said the acquisition would allow the company to diversify its drug lineup while continuing to develop new treatments.
The combination could solve those problems for AbbVie Inc., based in North Chicago, Illinois, and Allergan, which is based in Dublin on paper but operates from headquarters in Madison, New Jersey.
Drug maker AbbVie Inc said on Tuesday it would buy Botox-maker Allergan Plc for about $63-billion, grabbing control of by far the biggest name in medical aesthetics to help reduce its reliance on blockbuster arthritis treatment Humira.
Industry analysts had been anticipating a move by AbbVie.
"We are unsurprised by the timing and the target of the deal given (AbbVie's) Humira patent cliff, " wrote Citi analyst Andrew Baum.
Morningstar analyst Damien Conover wrote that the deal will partially alleviate worries about Humira. Both companies have bled market value in the past year as investors questioned whether AbbVie can make up for falling sales of its blockbuster psoriasis and arthritis treatment Humira, which rang in almost $20 billion in 2018 revenues alone, and pushed for a breakup of Allergan amid pipeline struggles.
"In return, Allergan shareholders get a decent premium to what has been an outrageously low stock price", Jacobs said.
AbbVie shares were trading down 10.5 per cent at $70.50, while Allergan shares were up almost 28.4 per cent in early trading. AbbVie stock, for its part, was down more than 15%. Allergan Chairman and CEO Brent Saunders, plus a second Allergan board member, are to join AbbVie's board.
Regulators and Allergan shareholders still have to approve the deal.
AbbVie CEO Richard A. Gonzalez heralded the deal as "transformative".
In early March, Swiss drugmaker Roche won a bidding war for Philadelphia-based gene therapy company Spark Therapeutics.
News of the possible deal comes a day after Bristol-Myers Squibb Co. agreed to divest one of Celgene Corp.'s most lucrative drugs in order to close their planned US$74 billion combination.
The transaction is expected to add 10% to adjusted earnings per share over the first full year following the close, the companies said.
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