AbbVie to Pay £14Billion for Pharmacyclics, Maker of a Promising Cancer Drug
Californian Bio-tech company AbbVie announced that it had agreed to buy Cancer drug maker Pharmacyclics, for $21bn maker of a cancer drug that some analysts predict will eventually become one of the best-selling treatments for the disease, for nearly half a Trillion dollars about £ 14bn ($21 billion).
AbbVie won three way fight over Pharmacyclics, in the one of the most competitive bidding wars for years, beating the likes of Johnson & Johnson, that resulted from opening three sealed envelopes and one person involve in the final deal. The deal is the latest in the health care industry, which has been rife with transactions as drug makers seek to refill their product pipelines with new treatments. According to Robert W Duggan, the Pharmacyclics, Chief executive who hold 58% at $3.5bn said this deal is a remarkable turnaround for Pharmacyclics. The acquisition strengthens a huge financial windfall for Mr. Duggan, who was a novice in pharmaceuticals, hen he took over the company in 2008, a year in which the stock dipped below $1 a share. But it closed on Wednesday at $230.48.
Under the terms of the deal, AbbVie based in Sunnyvale, will pay £172 ($261.25) per share in cash and stock. That represents a 13 percent premium to Wednesday’s closing price.
Based in Sunnyvale, Calif., Pharmacyclics focuses on anticancer drugs. Its product is Imbruvica, a pill used to treat certain blood cancers. A one-month treatment can cost $9,000 or more.
Pharmacyclics’ revenue was $730 million in 2014, compared with $260 million the previous year.
Mr. Duggan in the past had made fortunes investing in and helping run companies as varied as a maker of children’s embroidery sets, a cookie bakery and Computer Motion, a pioneer in robotic surgery, which became part of Intuitive Surgical.
He became an investor in Pharmacyclics in 2004 because he had a son with brain tumor. Mr. Duggan thought about trying to revive the brain cancer drug.
That compound became Imbruvica, known generically as ibrutinib, which was approved late in 2013. It is used to treat chronic lymphocytic leukemia and some other rarer blood cancers.
Net sales of Imbruvica in 2014 were $548 million, with $492 million of that in the United States, Pharmacyclics said. Mr. Duggan predicted that sales in the United States would reach $1 billion this year. And some analysts predict that the drug will eventually reach $3 billion or more in annual sales.
AbbVie needs to diversify because it now gets almost two-thirds of its sales from the drug Humira, which is used to treat various autoimmune diseases and is the world’s best-selling medicine. But Humira will lose patent protection and is expected to face competition from near-generic copies. It is developing a drug called ABT-199 with Genentech that would treat the same types of blood cancers as Imbruvica, making it a potential competitor.
Still, there are likely to be questions raised about whether AbbVie is paying too much for what is essentially half ownership of a single drug.