Would AbbVie’s top execs really pull the trigger on a $30B M&A deal? Why, yes, actually
Leave it to Jami Rubin to put the Big Pharma CEO on the spot.
On Friday’s call with the top team at AbbVie, the salty Goldman Sachs analyst asked AbbVie CEO Rick Gonzalez point blank about an earlier comment that he had made about his willingness to do a $20 billion to $30 billion M&A deal.
What followed was a good deal of bobbing and weaving, with caveats and qualifications aplenty. But Gonzalez also made it clear that if the right blockbuster came along, he would pull the trigger on a big acquisition.
When we find the right kind of opportunity, that we think fits strategically that we believe we can get a good return for our investors, fits into what we’re good at, then we’ve shown, we’re not shy, we’ll act on those.
A little over three years ago, AbbVie snapped up Pharmacyclics for $21 billion, along with rights to Imbruvica. But $20 billion to $30 billion deals these days are rare for a reason. Valuations are sky high and it’s hard to find the right asset at the right price at that level of M&A. And nobody wants a rep for acting recklessly in this market.
I mean my objective there was to frame how we viewed large bolt-ons like a Pharmacyclics-like asset. As we look at, at how we’re going to build this business going forward. We obviously have a commitment … that we’re going to deliver top tier performance and we’re going to do it over the long-term and we’re going to grow through the biosimilar impact (on Humira) that we knew we were to face from day one.
So there’s nothing on the horizon right now, but don’t rule it out. AbbVie is thinking in blockbuster terms for when it faces generic competition on Humira in 2023, blowing a multibillion-dollar hole in its top line.
Imbruvica’s sales growth is helping Gonzalez make that case, and the new approval for Orilissa is helping prove that the aggressive AbbVie is moving forward where it counts in new product development. But after Rova-T flopped, after they spent a painful $6 billion on the upfront, AbbVie’s top team remains curious about the big fish that are still out there in the global pipeline. And they have the cash to back it up.