Pharma drama: AbbVie buys Pharmacyclics for $21bn

 
Emma Haslett
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Deals between pharmaceutical companies have increased in recent months (Source: Getty)

Pharma M&A in the UK might have turned into a year-long farce, but across the pond it's kicked off 2015 on a positive note, after it was revealed last night that drugs giant AbbVie had agreed to acquire Pharmacyclics for $21bn (£14bn).

It was reported that AbbVie had gazumped Johnson & Johnson, which was said to have come close to agreeing, if not actually agreed, a deal hours earlier. There was also another suitor with their hat in the ring, although that potential buyer hasn't been named.

That price tag represents a nearly 50 per cent premium over Pharmacyclics' market cap, but the company's Imbruvica cancer drug, which has been dubbed "blockbuster" by analysts, made it more sought-after.

Taken orally, it acts as a treatment for blood cancers including chronic lymphocytic leukemia, mantle cell lymphoma and Waldenstrom's macroglobulinemia. The drug received approval from US authorities in 2013, and has since been approved in more than 40 countries. Its potential market is massive: it's thought it could have use in treating solid tumours, too. Indeed, figures posted by Pharmacyclics showed sales of the drug accounted for two-thirds of its total revenues in the fourth quarter.

The deal is worth $261.25 per share, which will take the form of a mix of 58 per cent cash and 42 per cent AbbVie common stock.

Richard Gonzalez, AbbVie's chairman and chief executive, called the acquisition a "stategically compelling opportunity".

The addition of Pharmacyclics' talented and innovative team will add enormous value to AbbVie.

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