Botox maker Allergan to acquire pharma firm for €567m

Allergan, the maker of wrinkle smoothener Botox that employs about 900 people in Ireland, said it would spend $639 million (€567 million) to acquire Vitae Pharmaceuticals, a drugmaker focused on medicines for skin conditions.

Vitae is developing an experimental drug for psoriasis, an autoimmune skin disease, and another medicine for atopic dermatitis, which causes itching and inflammation.

The drugs are in mid-stage clinical testing.

"The acquisition of Vitae is a strategic investment for Allergan that adds strength and depth to our innovative medical dermatology franchise," said Brent Saunders, Allergan chief executive.

Mr Saunders has embarked on a string of small deals to grow Allergan's pipeline after the US government thwarted its plan to sell itself to Pfizer for $160 billion.

Price hikes

The addition of Vitae is not a mega-deal in the pharma world, nor is it a purchase of already marketed drugs that are ripe for price hikes. Instead, market-watchers see it as a risky, research-focused deal for drugs that are still in development and face heavy competition.

Allergan chief executive Brent Saunders hinted at Morgan Stanley’s health-care conference on Tuesday that such a deal might be coming. He said M&A deal flow has never been stronger and that Allergan was looking for new R&D opportunities. He asserted that Allergan isn’t a speciality pharma firm, referring to a once-popular model that has lately come to be known for focusing on older medicines, de-emphasising research and hiking prices.

Allergan’s move away from that model started with its $40.5 billion sale of its generics business to Teva, completed in early August. It continued with the company’s recent pledge to take only moderate price increases, putting it ahead of many respected pharma firms on the controversial issue of drug pricing.

And on September 6th it paid $60 million up front for a company that hopes to use gene therapy to cure an eye disorder. Yesterday’s deal is Allergan’s latest conspicuous step away from the speciality pharma model.

Allergan’s R&D spending is already rising, and it is now clearly a focus of the company’s deal and investment strategy. It still differs from traditional pharma in that it de-emphasises the earliest stages of drug discovery in favour of acquiring medicines where such early work has already been done.

– (Copyright The Financial Times Limited 2016/ Bloomberg)