Analyst Comment: AbbVie acquires Pharmacyclics for $21bn.
Senior Analyst, Ali Al-Bazergan gives his initial opinion on AbbVie's agreement with Pharmacyclics
By Ali Al-Bazergan, Lead Analyst
5 March 2015
I am the Lead Analyst of the company analysis team at Datamonitor Healthcare, based in the London office. I focus on tra...
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“The $261.25 a share cash-and-equity offer for Pharmacyclics comes in at a premium of nearly 50% as drug firms continue to pay for inflated assets to replenish revenues. It’s not surprising that AbbVie usurped Johnson & Johnson in its bid to secure the much-vaunted oncology drug Imbruvica, forecast by Datamonitor Healthcare to reach total global revenues of $3.9bn by 2023. After withdrawing its deal for Shire on the back of anti-inversion measures in the US, AbbVie would have intensified its search for strong assets that can navigate strong headwinds to the company’s top line to alleviate pressures on AbbVie’s portfolio and decrease its over-dependence on its immunology drug, Humira.
Diversifying into hematological oncology conditions will stand the company in good stead to secure its long-term growth prospects with further touted expansions to the Imbruvica franchise including diffuse large b-cell lymphoma and follicular lymphoma indications, amidst multiple pipeline prospects.
The company will bank on these expansions to back the premium it has paid for half of an asset shared with Johnson & Johnson. The deal continues the trend of drug companies paying steeply for growth assets and due to favorable market conditions and cheap debt, the sector will only continue to consolidate.”
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