AbbVie, Allergan score FTC approval for $63B merger with one final hurdle left to go

FTC building
The FTC's greenlight for the AbbVie, Allergan merger came nearly two months after the deal passed European regulator scrutiny. (FTC)

AbbVie and Allergan have waited for nearly a year for their much-discussed merger to pass muster. But finally, after pushback from consumer groups and tight scrutiny from regulators, the Federal Trade Commission has granted the megadeal a green light.

The partners face just one final hurdle to consummating their $63 billion deal, which would create the fourth-largest drugmaker in the world and help AbbVie bridge the gap from looming U.S. biosimilars to megablockbuster Humira.

As part of the agreement, AbbVie and Allergan will offload Allergan's late-stage gastrointestinal candidate brazikumab to AstraZeneca as well as two pancreatic replacement enzymes, Zenpep and Viokace, to Nestlé. 

In addition, only one Allergan board member will be allowed to take a seat on AbbVie's board of directors. Allergan Chairman and CEO Brent Saunders has chosen to step aside, forgoing the board seat "to pursue other opportunities in the sector," AbbVie said in a release.

The merger is pending final closing, and an Irish High Court hearing on the acquisition was scheduled for Wednesday.

RELATED: AbbVie, Allergan merger may face regulatory delay due to COVID-19 despite drug sell-off: report

The FTC green light comes a little more than two months after the European Union gave its own blessing to the deal. In early March, the drugmakers closed a deal with AstraZeneca to offload brazikumab and end the EU's antitrust review. 

Allergan had previously agreed in January to sell off brazikumab, Zenpep and Viokace. Two weeks after clearing the EU's review, AbbVie and Allergan reached a "consent decree" with the FTC in March to divest the three drugs, hoping to avert additional antitrust scrutiny. 

The partners had to clear more than a few asset sales in their quest for a deal: The plan received fierce pushback from consumer groups and had to run the homestretch with the novel coronavirus pandemic snagging regulators' review. 

RELATED: AbbVie, Allergan clear EU merger hurdle with GI candidate sale

In March, the FTC said it may consider requesting extensions if companies were not able to produce documents and employees in a timely manner for a review, potentially pushing back legal deadlines for megamergers. Despite those warnings, AbbVie set a timeline for an approval in May after inking the FTC consent decree.

In September, the FTC issued a "second request" for information on the deal within weeks of union and consumer groups complaining the merger would give AbbVie a competitive edge.

The merger will offer a path for AbbVie after Humira––and its more than $19 billion in annual sales––begin to face biosim challengers in 2023. However, the way ahead isn't without pitfalls.

RELATED: JPM: A Humira-beating $20B in sales from Skyrizi and Rinvoq? It's possible, AbbVie CEO says 

In January, AbbVie announced plans to separate Allergan's lagging cosmetics products––including cosmetic Botox, the Coolsculpting platform, and chin-fat-fighter Kybella––into a new unit named Allergan Aesthetics. The move may have put to rest some analysts' concerns that Allergan's aesthetics business would drag down profits once the merger closes. 

However, AbbVie will be able to lean on blockbuster sales of Botox as well as the skyrocketing antipsychotic Vraylar. AbbVie also sports two superstar launches, immunology meds Skyrizi and Rinvoq, that CEO Rick Gonzalez said in January could hit combined peak sales of $20 billion. 

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