AbbVie said Tuesday it will acquire Allergan (AGN) for $63 billion — the latest megamerger between two pharma giants seeking new ways to grow.
The deal, combining two firms built by past acquisitions, represents a solution to existential problems facing both companies. Allergan has faced questions over its potential for growth, its moves to extend its patents, and its ability to develop experimental drugs. AbbVie (ABBV) markets the best-selling drug in the world, Humira, which has annual sales of $20 billion, but investors worry that it will not be able to maintain those revenues after patents on the drug expire. The big prize for AbbVie is Allergan’s franchise of aesthetics drugs, including Botox, which has annual sales of $3.6 billion.