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AbbVie says Allergan takeover delayed by FTC verdict

Merger now likely to complete in second quarter rather than first

AbbVie

The $63bn takeover of Allergan by AbbVie is now likely to take place in the second quarter of the year rather than the first, as the two companies wait for approval by the Federal Trade Commission (FTC).

The US financial regulator is still carrying outs its antitrust review of the deal, designed to make sure that the merger doesn’t create a combined company with an anti-competitive position.

There’s no specified timeline for that review to complete, but AbbVie says it has “entered into a timing agreement with FTC staff that would likely result” in a second-quarter decision.

There was some good news for AbbVie and Allergan yesterday as the European Commission (EC) approved the divestiture of brazikumab (MEDI2070), an investigational IL-23 inhibitor in development for autoimmune diseases, to AstraZeneca.

Allergan agreed to return rights to brazikumab to AZ earlier this year, without disclosing financial terms, amid speculation that the combined company would have a much too dominant position in immunology.

AZ licensed the drug – which is in late-stage testing for ulcerative colitis and Crohn’s disease – to Allergan in 2016. The EC approval also follows the divestiture of two pancreatic enzyme replacement products, Zenpep and Viokace, to Nestlé.

The move to return rights to AZ faced opposition from consumer groups and public interest organisations, which said immunology wasn’t a core focus for AZ and it “may lack the incentive and ability to fully restore competition” to AbbVie with the drug.

The Commission’s decision clears the final obstacle to the merger from the EU’s perspective, although it is still “subject to additional customary closing conditions”, according to AbbVie, which says it is also waiting for approval by the Irish High Court.

Opponents in the US have also taken issue with AbbVie’s use of “rebate walls” – volume-based rebates or other incentives offered to insurers or pharmacy benefit managers in return for formulary position.

They say the merger with Allergan to create the fourth-largest pharma company will increase the use of this strategy and lead to increased drug prices.

The FTC asked for additional information from the two companies last September as part of its review of the takeover, but there’s been no public report of any specific antitrust issues holding up the process.

Article by
Phil Taylor

4th March 2020

From: Sales

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