Abbvergan by numbers

2019’s second mega-merger has emerged, and Vantage has crunched some EvaluatePharma data to help dissect the proposed deal.

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)
  Product Company 2018 2024e
Thyroid hormone deficiency Synthroid Abbvie 776 791
  Armour Thyroid Allergan 199 229
Psoriasis Humira Abbvie 3,530 2,145
  Skyrizi Abbvie - 2,510
  Tazorac Allergan 26 -
Ulcerative colitis Humira Abbvie 2,524 684
  Upadacitinib Abbvie - 804
  Asacol Allergan 17 1
  Delzicol Allergan 159 28
  Canasa Allergan 187 16
Pancreatic insufficiency Creon Abbvie 928 1,290
  Zenpep Allergan 238 312
Testosterone deficiency AndroGel Abbvie 469 45
  Androderm (Low Dose) Allergan 57 50
Source: EvaluatePharma.

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)
Botox Medical aesthetic 5.07 46.11
Juvederm Voluma Medical aesthetic 1.93 6.58
Lumigan Glaucoma treatment 0.60 3.40
Vraylar Anti-psychotic 1.41 3.36
Lo Loestrin FE Hormonal contraceptive 0.71 2.25
Linzess IBS/chronic constipation 0.92 1.64
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
Atogepant* Migraine prevention 0.29 1.31
  Total marketed products  14.14 77.65
  Total R&D projects  1.67 5.15
  Total Allergan  15.81 82.80
*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)
Product Description 2018 2021e 2024e
Humira Antirheumatic 19.9 18.6 11.9
Imbruvica Leukaemia/lymphoma therapy 3.0 5.0 6.1
Skyrizi Anti-psoriasis agent - 1.1 3.2
Venclexta Leukaemia/lymphoma therapy 0.3 1.8 3.0
Upadacitinib Antirheumatic - 0.7 2.5
Source: EvaluatePharma.


Allergan's top 5 products
    Annual sales ($bn)
Product Description 2018 2021e 2024e
Botox Medical aesthetics 3.6 4.3 5.1
Juvederm Voluma Medical aesthetics 1.2 1.5 1.9
Vraylar Anti-psychotic 0.5 1.0 1.4
Linzess IBS/chronic constipation 0.79 0.88 0.92
Lo Loestrin FE Contraceptive pill  0.53 0.63 0.71
Source: EvaluatePharma.

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