Please ensure Javascript is enabled for purposes of website accessibility

AbbVie's Pending Acquisition of Allergan Earns FTC Approval

By Prosper Junior Bakiny – Updated Jun 23, 2020 at 4:41PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

With this final regulatory sign-off, the deal between these two pharmaceutical giants should close very soon.

In June 2019, AbbVie (ABBV -2.12%) announced it would acquire Allergan (AGN) in a cash and stock transaction valued at $63 billion. And Tuesday, almost a year after the news first broke, the pharma giant finally cleared the last of the regulatory hurdles involved when it received the green light from the U.S. Federal Trade Commission (FTC), meaning AbbVie may now move forward with the acquisition.

This deal did encounter several impediments. Most notably, a coalition of consumer groups and unions expressed antitrust concerns and argued that AbbVie's acquisition of Allergan would reduce competition in ways that would harm consumers. The coalition asked the FTC to investigate -- and potentially block -- the deal.

AbbVie and Allergan agreed to divest several assets to address these antitrust concerns. Allergan sold Brazikumab -- an investigational treatment for Crohn's disease and other autoimmune disorders -- to AstraZeneca. Allergan also divested Zenpep, a product that treats the lack of enzymes caused by certain conditions such as cystic fibrosis, to Nestle. The closing of the acquisition is imminent now that AbbVie and Allergan have received the FTC's blessing. 

Doctor giving a thumbs up

Image Source: Getty Images.

AbbVie has a lot riding on this acquisition. It's biggest cash cow -- Humira, an immunosuppressant that treats several conditions such as rheumatoid arthritis and plaque psoriasis -- has been losing steam in Europe due to competition from biosimilars. During the first quarter, Humira's international revenue was $1.047 billion, a 14.9% decrease compared to the prior-year quarter.

The pharma giant does have other products whose sales are growing fast. For instance, its cancer treatment Imbruvica recorded a revenue of $1.2 billion during the first quarter, a 37.9% increase compared to the year-ago period. Also, revenue from Venclexta, another cancer medicine, increased by 109.9% year over year to $317 million. But its purchase of Allergan should go a long way toward helping the company further decrease its reliance on Humira.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool recommends Nestle. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Allergan Stock Quote
AbbVie Inc. Stock Quote
AbbVie Inc.
$140.29 (-2.12%) $-3.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.