A drug megamerger that’s patently interesting

Today's Agenda A $63 billion Allergan deal won't be enough for AbbVie. A 1.2% interest rate on a 100-year bond is not normal. Trump's Iran sanctions may be smart, but the risks are growing. New York City's growth boom may be ending. AbbVie's Botox Shot An increasingly aging America is going to need a lot of Humira for its many inflammations and Botox for its wrinkling faces. Very soon one company will be in prime position to reap much of that windfall – for a few years, at least. Humira maker AbbVie Inc. is paying $63 billion to buy Botox maker Allergan Plc, the companies said today. Humira is the world's best-selling drug, at about $20 billion in sales per year. But despite the best efforts of its genius patent lawyers, AbbVie's exclusive rights to Humira will expire in 2023, notes Joe Nocera. Botox, meanwhile, will never lose patent protection, because it is not patented. It turns out Allergan's patent lawyers are even smarter than AbbVie's; they invented the Mohawk Tribe Gambit after all. They also trademarked Botox – and trademarks, Joe writes, are forever, just like those wrinkles that come back when the Botox wears off or "Macarena" once it gets in your head.  The trouble is that Botox only had $2.5 billion in sales last year; that's expected to rise to nearly $5 billion by the time Humira protection ends, but that growth will be slowing, notes Max Nisen. And as mathematics and the chart above make clear, $2.5 billion is less than $20 billion. So buying Allergan won't be nearly enough to patch AbbVie's Humira-sized hole, and Max says its future is still cloudy. Maybe that's why AbbVie stock tumbled 16% at one point today. More Bond Madness Let's say I want to borrow money from you, and I want to take 100 years to pay you back. What sort of interest rate would you charge me? Probably infinity interest, yes? If I were the government of Austria, then the bond market would today charge me just 1.2%, observes Marcus Ashworth. That is wild! We talked yesterday about how the quest for yield in a Fed-squeezed financial universe is driving investors to take ever-bigger risks. Marcus points out this pressure is warping super-safe assets too.  Austrian 100-year bond yields aren't the only interest rates falling. U.S. mortgage rates are down too, which you would think would boost the housing market. Instead, housing sales and prices keep disappointing, notes Robert Burgess. That is a troubling sign for the whole economy. Iran Tensions Enter Name-Calling Phase The U.S.-Iran Tension Meter ticked up another notch today, from Threat Level YOU Get a Sanction, YOU Get a Sanction to Threat Level Your President Is Disturbed. Iranian President Hassan Rouhani diagnosed U.S. President Donald Trump's administration with having a "mental disorder," and Trump responded by warning of the potential for "overwhelming force." This comes after Trump levied more sanctions on Iran's regime (but not Rouhani, in a backhanded dis) in response to Iran shooting down an American drone, among other provocations. Contra Rouhani, Bobby Ghosh writes Trump's sanctions are actually much smarter than military confrontation. Iran may think it can hold out for Trump's ouster, but during that wait its economy will suffer deeply. The risk is that an Iran unable to export oil for a long time will be ever more inclined to threaten the safe passage of oil tankers through the Strait of Hormuz, notes David Fickling. This would not only ratchet up military risks but also possibly oil prices, just in time for the 2020 election. Escape From New York New York City may still be a cesspool in places – hello, Penn Station – but it has enjoyed a pretty nice couple of decades of relatively low crime and strong income growth. But this era has also led to surging rents and inequality, notes Noah Smith. And these problems have triggered a backlash that carries the seeds of stagnating population growth.  Further New York Reading: The city's most common professions are what you'd expect they'd be. The same goes for Los Angeles, Chicago and Seattle. – Justin Fox  Telltale Charts Slowly dumping U.S. dollars and buying gold looks like a good bet so far for Russia, notes Leonid Bershidsky. Further Reading The Trump administration's rule pushing hospitals to reveal medical costs won't cut those costs alone but it's a good and necessary start. – Bloomberg's editorial board Republicans should push for a carbon tax, if only to fend off even more radical climate-change ideas from the left. – Karl Smith  Boris Johnson and Jeremy Hunt both plan to slash corporate taxes; Ireland and other neighbors won't be pleased. – Lionel Laurent  The seldom-seen Larry Page either needs to get more engaged as Alphabet Inc. CEO or give somebody else the job. – Shira Ovide  Here's how to make the G-20 relevant. – Mohamed El-Erian  A summer reading list. – Scott Duke Kominers  Just because some animals haven't evolved adorable puppy-dog eyes doesn't make them any less valuable. – Faye Flam  ICYMI Another Kushner property is in trouble. Natixis's H2O Funds keep hemorrhaging money. Wayfair Inc. workers plan walkout to protest the company selling to migrant camps. Kickers I'm not crying about Gritty delivering a prosthetic to a seven-year-old boy, YOU are. (h/t Scott Kominers) Signs of Parkinson's might show up in the brain decades before the disease's onset. Hospitals aretoo loud. The New York Mets are masters of self-inflicted misery. Note: Please send reading lists and complaints to Mark Gongloff at mgongloff1@bloomberg.net. New to Bloomberg Opinion Today? Sign up here and follow us on Twitter and Facebook. FOLLOW US SEND TO A FRIEND You received this message because you are subscribed to Bloomberg's Bloomberg Opinion Today newsletter. Unsubscribe | Bloomberg.com | Contact Us Bloomberg L.P. 731 Lexington, New York, NY, 10022