Valeant’s purchase of Sprout will include $500 million cash up front as well as $500 million when the deal is closed, which is expected to be in early 2016. In addition, Valeant has agreed to give Sprout a portion of future revenues if certain milestones are met, although neither party would discuss specifics. Sprout CEO Cindy Whitehead will join Valeant and lead the division responsible for Addyi.
In one for the “wow that was quick!” file, drugmaker Valeant has agreed to a roughly $1 billion cash agreement to purchase the maker of Addyi, which has been commonly referred to as the “female Viagra.” Sprout Pharmaceuticals purchased the rights to flibanserin, the generic name of the drug, from Boehringer Ingleheim in 2012 after a failed attempt by that company to get marketing approval from the Food and Drug Administration (FDA). Sprout tried on its own in 2013, only to have the FDA’s recommendation panel reject the application, yet offering guidance upon Sprout’s request in 2014 on how to create a successful proposal for the drug. On Tuesday, the FDA finally approved flibanserin amid both great fanfare and a large dose of skepticism. Sprout said that the drug would be on the market by October 17th. Valeant Chief Executive Michael Pearson told CNBC that the company had been in talks with Sprout for about three weeks.
Montreal-based Valeant, which also has a U.S. office in New Jersey, specializes in eye care and dermatology. The company has undergone an aggressive acquisition strategy in recent years, having already purchased Salix Pharmaceuticals last year and the well-known eye-care brand Bausch & Lomb in 2013. According to Bloomberg, the company has spent $14.9 billion on 12 acquisitions since last year, including the $11 billion purchase of Salix, a leading provider of gastrointestinal remedies. Valeant’s purchase of Sprout will include $500 million cash up front as well as $500 million when the deal is closed, which is expected to be in early 2016. In addition, Valeant has agreed to give Sprout a portion of future revenues if certain milestones are met, although neither party would discuss specifics. Sprout CEO Cindy Whitehead will join Valeant and lead the division responsible for Addyi.
Sprout had previously told the FDA that the company would promise not to market the drug directly to consumers for the first 18-months. Whitehead said however, due to the sale, “We will revisit that as we go along.” Valeant has already announced that it will use its global scale to market the drug around the world. Erectile dysfunction market leader Viagra earned $1.7 billion in sales revenue in 2014 alone. Some question however, if the market for women’s libido medication will be as high given the differences. Drugs like Viagra and Cialis affect blood flow to the male genitals, whereas Addyi is more like an antidepressant, taken nightly and affecting brain chemistry. Insurance companies may also prove to be a barrier for sales. Humana, the fifth-largest insurance company, has already said that it will be classified alongside erectile dysfunction drugs, which are typically not covered. Anthem, the third-largest insurers, has added the drug in a classification which covers it, but requires higher co-pays. The other three leading insurance providers have said that they are reviewing Addyi in regards to classification.
Sources:
Bloomberg Business – Caroline Chen, Cynthia Koons, and Anna Edney
CNN Money – Aaron Smith
Reuters – Natalie Grover and Ankur Banerjee
Join the conversation!