With mounting evidence that the US FTC is becoming more stringent in scrutinising overlapping businesses, one of the first considerations of Abbvie’s $63bn move on Allergan today has to be potential anti-trust issues.
While a look at the two company’s portfolios shows few substantial areas of concern, the requirement for Bristol-Myers Squibb to divest Celgene's Otezla came as something of a surprise, so perhaps Abbvie should be prepared for the worst.
On a conference call this afternoon Abbvie’s chief legal officer, Laura Schumacher, said there were a few small overlaps, and that the company had already agreed promptly to divest some products. These could well include drugs for pancreatic insufficiency, testosterone deficiency and possibly ulcerative colitis. Bernstein analysts have speculated that certain GI franchises might also attract attention.
The table below details indications in which both companies register sales, and in which one or both hold sizeable shares of the market. Potential buyers of these assets take note.
|Attracting the attention of the FTC? Significant areas of overlap for Abbvergan|
|Sales by indication ($m)|
|Thyroid hormone deficiency||Synthroid||Abbvie||776||791|
|Androderm (Low Dose)||Allergan||57||50|
Allergan’s share price traded at Abbvie’s offer price a mere eight months ago, so it is not surprising that some analysts have already decried the deal as opportunistic. SVB Leerink proposed at least $200 a share as more reasonable, although with few other companies with the firepower to come in and wreck the deal the odds are on for the purchase to go through unchallenged.
One take on the net present value of Allergan supports the claim that Abbvie is getting itself a good deal. EvaluatePharma’s NPV model, which is based on sellside revenue forecasts, calculates an $83bn value for Allergan’s products, including $78bn for the marketed drugs alone.
|Allergan's 10 most valuable assets – a sellside-based NPV model|
|Product||Description||2024e sales ($bn)||NPV ($bn)|
|Juvederm Voluma||Medical aesthetic||1.93||6.58|
|Lo Loestrin FE||Hormonal contraceptive||0.71||2.25|
|Armour Thyroid||Thyroid hormone deficiency||0.23||1.53|
|Refresh||Dry eye treatment||0.44||1.37|
|Ozurdex||Eye disorders incl. macular oedema, uveitis||0.45||1.32|
|Total marketed products||14.14||77.65|
|Total R&D projects||1.67||5.15|
|*In phase III, all other products marketed. Source: EvaluatePharma.|
Still, beyond Botox, Allergan’s biggest products look unlikely to translate into best sellers for Abbvie; Allergan’s pipeline is similarly lacklustre (A Botox filler for Abbvie's Humira-shaped hole, June 25, 2019).
As long as it can keep its hands on Botox, Abbvie should be able to cope with any requests to divest from the FTC.
|Abbvie's top 5 products|
|Annual sales ($bn)|
|Allergan's top 5 products|
|Annual sales ($bn)|
|Juvederm Voluma||Medical aesthetics||1.2||1.5||1.9|
|Lo Loestrin FE||Contraceptive pill||0.53||0.63||0.71|