AbbVie acquires Shire amid looming Humira biosimilar competition

July 28, 2014

The AbbVie purchase of Shire for about $54 billion will create one of the biggest deals so far this year.

The AbbVie purchase of Shire for about $54 billion will create one of the biggest deals so far this year.

“The deal gives formulary managers wider access to Shire’s portfolio of drugs, capitalizing on AbbVie’s sales and distribution strength in the United States,” according to Aparna Krishnan, MS, GlobalData’s analyst covering healthcare industry dynamics.

“Emerging drugs from Shire’s pipeline, primarily from the rare diseases and immunology portfolio, will especially gain from AbbVie’s established field force network in the United States on reaching commercialization,” Krishnan said.

AbbVie’s best-selling rheumatoid arthritis therapeutic adalimumab (Humira) will continue to be a major contributor to the combined entity’s revenues, according to Kishnan. However, the drug could face biosimilar competition as early as December 2016 in the United States, and in April 2018 in other markets.

“While a clear regulatory framework for complex biosimilars, such as monoclonal antibodies, has yet to be enforced in markets such as the United States, a number of established firms, including Amgen and Sandoz, are running phase 3 trials of adalimumab biosimilars and are poised to compete head to head with AbbVie,” according to Kishnan.

Biosimilar competition could erode close to $100 billion in revenues that would otherwise be garnered by AbbVie over the next 15 years.

Despite this competition, Humira will remain AbbVie’s number-one franchise far into the future, with a net present value (NPV) of $37.6 billion (GlobalData estimated) and a free cash flow of more than $60 billion through 2029.