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AbbVie buys Pharmacyclics in $21 billion deal

Published on 05/03/15 at 10:35am
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AbbVie has secured Californian biotech Pharmacyclics and beat Johnson & Johnson to gain control of blockbuster blood cancer therapy Imbruvica in a $21 billion deal.

The purchase which comprises a mixture of cash and stock, not only gives AbbVie a big presence in the multibillion-dollar blood-cancer market, but also lessens the reliance on ageing arthritis drug Humira (adalimumab) – its biggest seller.

AbbVie’s chairman and chief executive Richard Gonzalez says: "The acquisition of Pharmacyclics is a strategically compelling opportunity. The addition of its talented and innovative team will add enormous value to AbbVie.

"Its flagship product, Imbruvica, is not only complementary to AbbVie's oncology pipeline, it has demonstrated strong clinical efficacy across a broad range of haematologic malignancies and raised the standard of care for patients." 

This deal has caught some observers off guard, the most notable being Johnson & Johnson who were said to be nearing an agreement to acquire Pharmacyclics and hoover-up the full sales force coming from Imbruvica (ibrutinib).

Bloomberg notes Pharmacyclics had a 2014 net income of $86 million, but sales of Imbruvica are expected to grow to $3.56 billion in 2018 from $492 million last year, as it’s used in more types of cancer.

AbbVie must have been keen to take a big bite into new business following its failure last October to secure Dublin-based Shire for $55 billion, after the US took steps to discourage tax-lowering deals.

AbbVie became a stand-alone company in 2012 after it split from Abbott. The two now trade independently and AbbVie was focussing predominately on prescription medicines, with Abbott’s business being based more on diagnostics.

After the split AbbVie gained rights to the autoimmune drug Humira which became the biggest-selling drug in the world, pulling in $10.7 billion in sales and making up 57% of its total sales for 2013.

As patent expiry began to fades those figures the firm also gave a forecast for adjusted 2015 earnings near the lower end of analysts’ estimates, as competition from generic drugs eats into profits: but this new deal could make a big difference. 

This new purchase is not actually all bad news for J&J however, as it is already partnered with Pharmacyclics on Imbruvica which it in fact co-markets.

In a statement J&J adds: “We’re looking forward to continuing our collaboration with the team at AbbVie to further develop and commercialise this important therapy for patients and their healthcare teams.”

Pharmacyclics also has an agreement with AstraZeneca to develop the drug for use with a type of cancer drug that activates the immune system to attack tumours. 

Brett Wells

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