A slide in AbbVie stock got all the attention when the drugmaker said this week it would buy Allergan for $63 billion. But the long decline in Allergan's share price is the true cautionary tale.
Back in 2015, the Botox maker was riding high. CEO Brent Saunders was hailed as a wunderkind after several multibillion-dollar deals. Then Pfizer agreed to buy Allergan, and there was talk that the then-45-year old would run the combined colossus.
That deal fell apart. Saunders has since overseen a $95 billion bonfire of shareholder value. Allergan's market cap dipped below $40 billion in the days prior to the AbbVie deal, a far cry from its $133 billion peak. AbbVie's management, while shelling out a 45% premium, said Allergan was cheap.
But what does cheap mean these days? Is Biogen cheap at $47 billion? Regeneron at $34 billion? Gilead at $85 billion? The largest biotechnology companies have shed billions in market value since their 2015 peaks. Is that a sign that prices are depressed, or that their best days are past?
Like Allergan (and AbbVie), many have become overly reliant on their top sellers. Few have convinced investors they know what's next. AbbVie's answer is Allergan. Everyone else is on the clock.—Rebecca Spalding Here's what else we're watching:Mediclash. Democrats split in a Wednesday debate on whether and how far to extend a Medicare-like program to all Americans, a sign that the issue could be a key differentiator in a crowded presidential primary field. Moment of clarity. The Trump administration issued a long-expected order that will make public now-hidden hospital prices. Less clear, however, is what patients are to do with the data once they have it in hand. Sell-gene. Bristol-Myers Squibb agreed to unload Otezla, one of the most lucrative drugs made by Celgene, to close its takeover of the biotech giant. Bristol-Myers shareholders flinched, adding to an extended post-deal slide.
Vape vote. San Francisco became the first U.S. city to vote to make selling nicotine vaporizer products illegal. The move by the city, home base of e-cig unicorn Juul, is the latest manifestation of concern about teen use. Listen up. Season two of our podcast is all about what happens when we hand over our health data to companies and governments. Download it here on Apple devices, and here on Android.  Got this newsletter forwarded to you? Sign up to get it every Thursday by clicking here.
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