AbbVie swoops for Pharmacyclics in $21bn takeover

Johnson & Johnson has missed out on acquiring its marketing partner Pharmacyclics after AbbVie snatched the company from under its nose with a $21 billion takeover.

The acquisition of Pharmacyclics and its prize asset, groundbreaking cancer drug Imbruvica, is in contrast to last year's embarrassing setback when AbbVie had to withdraw from its £34 billion ($54 billion) 'tax-inversion' acquisition of Shire.

But analysts and investors are indicating that AbbVie has paid well over the odds for Pharmacyclics, with AbbVie's share dipping in trading after the announcement.

Launched in 2013, Imbruvica (ibrutinib) earned $548 million last year, with $492 million of that in the US where Pharmacyclics markets the drug, with the rest going to J&J's pharma operation Janssen Cilag.

Imbruvica is one of a new wave of treatments for chronic lymphocytic leukaemia (CLL) and other rare blood cancers, and analysts predict peak annual revenues of $3 billion or more.

AbbVie is in urgent need of new revenues to support its growth, as it currently relies very heavily on its top-selling rheumatoid arthritis drug Humira, which will face biosimilar competition in the near future.

At least one other company, Novartis, had been rumoured to be interested in purchasing the company, based in Sunnyvale, California, but estimates of $18 billion had been floated, suggesting AbbVie's urgent need pushed the price up.

"The acquisition of Pharmacyclics is a strategically compelling opportunity. The addition of Pharmacyclics' talented and innovative team will add enormous value to AbbVie," said Richard Gonzalez, chairman and chief executive officer, AbbVie. "Its flagship product, Imbruvica, is not only complementary to AbbVie's oncology pipeline, it has demonstrated strong clinical efficacy across a broad range of haematologic malignancies and raised the standard of care for patients."

Pharmacyclics is currently pursuing trials of Imbruvica in seven further indications, but has just three more drugs in its pipeline, two cancer treatments in phase I development and an autoimmune treatment in pre-clinical development.

This relatively sparse pipeline and high price paid has led many analysts to conclude that AbbVie has overpaid for Pharmacyclics, but AbbVie is banking on the deal helping to provide synergies in haematological oncology. This is a rapidly growing market, which is approaching $24 billion in global annual revenues.

AbbVie has two haemato-oncology drugs in its pipeline for three indications: ABT-199, for acute myelogenous leukaemia and CLL and elotuzumab for multiple myeloma.