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FTC clears AbbVie’s $63bn Allergan takeover

US regulator satisfied that antitrust concerns are remediated

AbbVie building

AbbVie and Allergan have finally won approval from the US Federal Trade Commission (FTC) to complete a merger deal worth $63bn, almost a year after the acquisition was first announced.

Last June, AbbVie announced that it had agreed to acquire Allergan and its blockbuster drug Botox in a $63bn buyout, but the companies have since faced a rocky road on the way towards the final clearance of the merger.

Soon after the announcement, critics argued that the merger was a bad move on AbbVie’s part, and would only land the pharma giant with more debt and add little to its pipeline of new therapies.

Others praised the decision, noting that the acquisition will add $16bn in annual revenues to AbbVie’s overall sales, as it faces the impending loss of US patent protection for its $20bn immunology blockbuster Humira (adalimumab) in 2023.

Outside the pharma sector, AbbVie and Allergen faced even more opposition from an ensemble of consumer groups and public interest organisations that voiced antitrust concerns about the merger.

Despite Allergen divesting its investigational pipeline IL-23 inhibitor drug brazikumab to satisfy these concerns, the groups still took issue with the merger, stating that the decision ‘raises a serious number of concerns’ in a letter addressed to Ian Conner, director of the Bureau of Competition at the FTC.

The groups also criticised AbbVie’s overly dominant position in the immunology market, which they said ‘uses a variety of exclusionary tactics to hamper rivals’. The groups argued that AstraZeneca, which acquired brazikumab from Allergan, ‘may lack the incentive and ability to fully restore competition’ and also lacks the ‘product portfolio in immunology to adequately compete’ with AbbVie.

Despite the opposition, the European Commission approved the divesture of brazikumab in March, which was a significant win for AbbVie and Allergen. The decision to allow the divesture cleared the final obstacle to the merger from the EU’s perspective.

Across the Atlantic, the US FTC vote to clear the merger was a close call, with 3-2 voting in favour of clearing the deal. To further satisfy the FTC, Allergan also divested its exocrine pancreatic insufficiency treatments Zenpep/Viokace (pancrelipase) to Nestle.

The FTC also insisted that only one Allergan director join the AbbVie board following the completion of the acquisition. Allergen said that its current chief executive officer Brent Saunders has not been elected to join the AbbVie board post-merger, to give him “more flexibility to pursue other opportunities in the sector”.

According to Ireland-domiciled Allergen, the merger is still “subject to additional customary closing conditions” as it is still awaiting approval by the Irish High Court.

Article by
PMGroup

7th May 2020

From: Research

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