After nixing his company's $55 billion deal for Shire ($SHPG) last fall, AbbVie ($ABBV) CEO Richard Gonzalez reminded investors that his company still had the "wherewithal to be active on the M&A front." Now, he's putting his money where his mouth is--and shelling out $21 billion for cancer drugmaker Pharmacyclics ($PCYC).
The Abbott ($ABT) spinoff will fork over $261.25 per share in cash and stock for the California-based company, beating out rumored suitors Johnson & Johnson ($JNJ) and Novartis ($NVS). It expects the deal to prove "highly accretive" to both revenue and earnings by 2017, it said in a statement late Wednesday.
That's because of Imbruvica, the blood cancer powerhouse that has already racked up four indications since winning its first approval in November 2013. Last year, it helped take net revenues for Pharmacyclics--which splits the drug's marketing duties with J&J's Janssen--to $492.4 million from just $13.6 million the year prior, and analysts expect its peak sales to reach $6 billion.
That's revenue AbbVie will need as generics move in on some of its top products, including top dog and $11 billion seller Humira--which already has some biosimilar competition in India--and testosterone treatment AndroGel. And if ongoing efforts to expand Imbruvica's label even further come up successful, there could soon be more of it flowing in.
While AbbVie doesn't currently have any marketed cancer products--its latest victories have come in hepatitis C, where analysts expect brand-new Viekira Pak to break the blockbuster barrier--it has some working their way through the clinic.
The Pharmacyclics pickup "broadens and deepens AbbVie's already robust pipeline, and establishes the combined company as an emerging leader in the hematological oncology space," the company said.
Backing up AbbVie's aged moneymakers was once a job pegged for Shire's portfolio. But after AbbVie inked an agreement for the Dublin company last summer, new, stricter rules on tax inversions forced it to back out--and hand over a $1.64 billion breakup fee.
- read the release
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