Big pharma is buying time

Big pharma is speeding toward a $170 billion patent cliff, and hoping acquisitions can soften the landing.

Today, AbbVie is buying biotech Apogee Therapeutics for $10.9 billion in one of the biggest pharma deals of the year so far, and AbbVie’s largest acquisition in five years.

The deets: AbbVie is offering $135.11 per Apogee share, which implies a nearly 50% premium from yesterday’s closing price before the announcement.

Shares of AbbVie jumped 6.29% today, while shares of Apogee skyrocketed 46.66%.

AbbVie isn’t in it for Apogee’s name (which, let’s be real, is better). The company wants access to its lead drug candidate, zumilokibart, an experimental treatment for a slew of inflammatory diseases, including asthma and atopic dermatitis. AbbVie is doubling down on its already successful immunology drug franchise, which brought in $30 billion in revenue last year, a 14% jump from the year prior.

The best defense is offense

Today’s acquisition is about more than just one potential drug candidate. It’s part of a larger trend of big pharma giants acquiring promising biotech firms in an effort to replace future revenue losses before a slew of patents for blockbuster drugs expire. According to CNBC, best-selling brand name drugs worth $174 billion in annual sales will lose exclusive patents by 2032. Other calculations estimate that figure could be as high as $350 billion.

For pharma giants like Pfizer, Merck & Co, and of course AbbVie, that means a slew of biosimilar versions of their cash cows are about to hit the market, which could seriously undercut revenue.

AbbVie is still struggling with the expiration of its patent for its popular drug Humira (sales plunged over 38% last quarter), and is staring down eventual patent expirations for its blockbuster immunology drugs Skyrizi and Rinvoq. But not all pharma giants are exposed equally: Novo Nordisk and Eli Lilly are both somewhat protected compared to the broader industry due to the success of newer GLP-1 drugs.

By doubling down on its acquisition strategy, AbbVie is hoping to offset some of the impact of these patent expirations. Recently, AbbVie spent $10.1 billion on ImmunoGen to acquire its ovarian cancer drug, Elahere, and spent about $8.7 billion to acquire Cerevel Therapeutics, a neuroscience drug developer.

Between zumilokibart, Rinvoq, and Skyrizi, we just want to know which Lord of the Rings fan is in charge of coming up with names.—LB