Abbvie Buys Allergan For $63 Billion
It is known that the infamous pharmaceutical company, Allergan, has been struggling in the market for some time now. However, AbbVie has stepped in to acquire Allergan for a whopping $63 billion in one of the biggest biopharma deals of the year.
The deal is set to be profitable for both companies, and there are a lot of factors that need to be understood to get to the bottom of this deal and understand the dynamics of it. AbbVie CEO Richard Gonzalez is hopeful about this prospect and has said that it will entail ‘best-in-industry growth prospects.’ He also added that this deal would put AbbVie as the fourth largest manufacturer of medicinal drugs on a global scale. Although AbbVie investors do not share these particular sentiments, it is clear that there is still a long way to go.
Allergan has been under a lot of pressure over the past three or four years. Company shares fell from a record high of about $330 per share in the year 2015 to $115.73 earlier this year. This proved challenging for investors as well, and the company was being forced to split up to enhance profitability.
In this process, the management staff, CEO and chairman were also criticized, and some changes were suggested, but they were not taken up by Allergan. This particular deal has proven a welcome surprise for the investors as well as the rest of the company, and will most likely be a healthy step towards unlocking the true potential of Allergan.
The Pros of the Buyout
In the pharma industry, AbbVie is predicted to benefit from the buyout in terms of expansion and diversification. The company can go a long way in focusing on other areas and developing the best in the field of medical aesthetics. The best thing about this is that the buyout will help AbbVie overcome the decline of their aging drug, Humira.
Analysts say that even though Allergan is a big enough project to fill that hole, however, it depends on the public opinion as well. With new competitors coming up on the market for Humira, especially in Europe, Humira sales are declining, and AbbVie is hoping to make enough from these sales to come up with a better version of Humira and Allergan can help with that.
There are some finer points that still need to be dealt with; the deal will be finalized by the next year, 2020. AbbVie’s chief legal officer has said that there are no significant issues with the overlap, but there are still a few projects there need to be divested to make things run more smoothly.
With regards to the buyout and the deal in general, there are some kinks to figure out. Customers and investors alike are waiting for the deal to be finalized, because only time will tell how lucrative the buyout turns out.