Allergan says it’s “reloaded and ready to move” on further acquisitions after agreeing to sell its generic-drug business for $40.5 billion.
The deal with Teva Pharmaceutical Industries “gives us a tremendous amount of flexibility to think about transformational M&A as well as continue our pattern of tuck-in acquisitions,” Allergan Chief Executive Officer Brent Saunders said on a conference call Monday. It’s likely that in 18 months, Allergan will use the cash it’s getting from the Teva deal, he said.
The transaction takes this year’s total of announced pharmaceutical and biotech deals to a record $220.72 billion, surpassing last year’s $220.66 billion, according to data compiled by Bloomberg.
Allergan alone has accounted for almost $90 billion in deals over the past two years, building Saunders’s reputation as a high-stakes dealmaker. The Teva transaction lets Allergan pay off debt from its $66 billion combination with Actavis, allowing it to build its brand-name medicine business with small deals or to pursue larger acquisitions such as Amgen Inc. or AbbVie, said Ken Cacciatore, an analyst with Cowen & Co. in New York.
“If either transaction was pursued by Allergan, it would be well received by both sets of shareholders if the proper vision was articulated and a friendly agreement could be reached,” Cacciatore wrote in a report. Such a transaction “might be nearer than many assume,” he said.
Saunders has repeatedly said the company wanted to invest in more innovative and profitable brand-name drugs. The company said Sunday it would pay $560 million for Naurex, which is developing a fast-acting anti-depressant. Last month Allergan said agreed to buy Kythera Biopharmaceuticals Inc. for about $2.1 billion to add treatments for double chins and baldness.
Allergan could be a potential buyer of business units from Pfizer or of Novartis’ Alcon eye-care unit, if the Swiss drugmaker decided to sell it, Andrew Finkelstein, an analyst at Susquehanna International Group in New York, wrote in a report before the deal was announced.
Shareholders would like to see Allergan buy Biogen Inc. or AbbVie or do some sort of combination with Pfizer, Evercore ISI analyst Umer Raffat said in a July 25 note.
Allergan may also find itself the hunted. Valeant Pharmaceuticals, which lost out to Actavis, may be interested in acquiring Allergan’s remaining branded-drug business, Finkelstein said.
Actavis in March bought Irvine-based Allergan and took the Allergan name. The company is based in Dublin and with operating headquarters in Parsippany, N.J.
Press representatives at Novartis, Valeant and Pfizer declined to comment. AbbVie, Amgen and Biogen representatives didn’t immediately return calls and e-mails requesting comment.
“We have really positioned ourselves to be focused, reloaded and ready to move,” Saunders said. “Our main focus is going to be on accretive bolt-on and accretive transformational deals.”
