AbbVie: Allergan acquisition for $63 billion will merge Humira and Botox makers

AbbVie: Allergan acquisition for $63 billion will merge Humira and Botox makers

Shares of AbbVie are down 16% over the past year and shares of Allergan, with sales growth down over the past three quarters, have fallen 24%.

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 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. Last year, Humira generated $13.7 billion in US sales, 42% of revenue.

Allergan shareholders will receive 0.8660 AbbVie shares and $120.30 in cash for each share held, for a total consideration of $188.24 per Allergan share, a premium of 45% to the stock's Monday close.

But the AbbVie Allergan deal isn't just a story about health care consolidation - it's one about the state of innovation among big, legacy biopharma companies scurrying to find ways to plug future holes in their revenue streams. AbbVie's main areas of expertise are immunology, oncology, virology and neuroscience. Allergan rose 33 percent to US$172 in pre-market trading in the USA early Tuesday. AbbVie CEO Gonzalez will continue as CEO through Humira's loss of patent exclusivity in 2023, it added.

"Humira is buying the assets that replace it over the long term", said Gonzalez, who will lead the combined company and remain chairman and chief executive through 2023. Two Allergan board members will join AbbVie's board, including Allergan CEO Brent Saunders.

Other analysts say the Allergan deal looks more like a cosmetic fix than a long-term solution.

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.

"It's very unlikely we'll see a Botox biosimilar for a long, long time, if ever", he said on Tuesday of Allergan's efforts to protect the product. Bristol-Myers recently said the deal might not close until next year.

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