US biopharmaceutical company AbbVie said Tuesday it would buy Botox-maker Allergan for about $63 billion, moving to diversify its product line as the industry faces pressure on drug prices. The deal, the latest large transaction in pharma, broadens the product offerings for AbbVie, which has relied heavily on sales of Humira, a drug to treat rheumatoid arthritis that faces rising competition from generics.
Combining operations would allow annual savings of at least $2 billion through trimming duplicative research and development spending and cuts in sales and marketing spending, the companies said. The deal is expected to close early in 2020. "This is a transformational transaction for both companies and achieves unique and complementary strategic objectives," AbbVie Chief Executive Richard Gonzalez said in a statement. "With our enhanced growth platform to fuel industry-leading growth, this strategy allows us to diversify AbbVie's business while sustaining our focus on innovative science and the advancement of our industry-leading pipeline well into the future."
Allergan, which is based in Ireland, is best known for Botox, which reduces face wrinkles. The company specializes in the areas of medical aesthetics, eye care, central nervous system and gastroenterology. The company, which grew quickly earlier in this decade, has faced pressure from Wall Street, in part due to worries over the hit from patent expirations of eye medication restasis. Some analysts have called for the company to be broken up.
The companies will have a combined annual revenue of $48 billion and a presence in 175 countries, the statement said. "This acquisition creates compelling value for Allergan's stakeholders, including our customers, patients and shareholders," said Allergan Chief Executive Brent Saunders. The offer represents a 45 percent premium over Monday's share price of Allergan, whose management recommended the operation to shareholders.