Actavis to spend $66B on Allergan
Actavis, which is buying Botox-maker Allergan for $66 billion in one of the biggest acquisitions announced this year, plans to stay committed to developing products.
CEO Brent Saunders said Monday that the combined company will have more than two dozen products in late-stage clinical testing, which is usually the last and most expensive development phase, and it will work to support research.
“It is the lifeblood of our company,” he told analysts.
Actavis and the company it outbid for Allergan, Valeant Pharmaceuticals, have grown rapidly in recent years through multibillion-dollar acquisitions of other drugmakers. But experts say developing products internally is the preferred method for revenue growth if — and it’s a huge ‘if’ — enough of that research is successful.
“It’s also really risky,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business who follows the pharmaceutical industry.
Allergan spent months fending off overtures from Valeant, in part because it thought the Canadian drugmaker would gut its research funding. The Irvine, Calif., company complained that Valeant’s $53 billion bid was too low. Valeant Pharmaceuticals International Inc. partnered with the hedge fund and Allergan shareholder Pershing Square Capital Management on the bid.
Monday, Actavis announced an offer of about $219 in cash and stock for each Allergan share that has the support of both companies.
Valeant said separately that the Actavis bid is a price it “cannot justify to its own shareholders.”
The deal arises months after Actavis polished off a $28 billion purchase of Forest Laboratories. Last year, it bought Ireland’s Warner Chilcott for $8.5 billion and moved its headquarters to Dublin from Parsippany, N.J. That arrived a year after it merged with generic drugmaker Watson Pharmaceuticals.
Actavis PLC announced another deal update on Monday. It completed its offer to buy all outstanding shares of Durata Therapeutics Inc. in a deal worth about $675 million.
Other drugmakers, such as Merck & Co. and Novartis, have announced multibillion-dollar transactions this year.