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After strong Q3, no $55B deals in AbbVie’s future, CEO says. But a smaller one? Maybe

October 31, 2014
Life sciences
No Shire? No problem for AbbVie. At least, for now.
 
The Illinois drugmaker’s top dog, Humira, is still churning out forecast-topping sales, and it will be for the foreseeable future, the company said Friday. Following a 17.5% global sales leap for the world’s best-selling drug–which has been posting double-digit growth numbers ever since the company spun off from parent Abbott Laboratories early last year–AbbVie now predicts an EPS range of $3.25 to $3.27 for 2014, up from $3.06 to $3.16. 
 
But with a 2016 patent expiration date and biosimilars makers already taking aim, Humira won’t last forever, which was one reason the company this summer agreed to buy Irish drugmaker Shire ($SHPG) for $55 billion–or so industry-watchers thought. Following new U.S. rules that tightened the reins on tax inversions, AbbVie pulled the plug on the deal.
 
And going forward, investors shouldn’t expect a repeat, CEO Richard Gonzalez said on a call with investors. With a Q3 EPS increase of 8.5% and revenue jump of 7.8%–as well as some significant growth prospects on the horizon, like a hep C combo AbbVie expects to launch this year–the company is “in an even stronger position today than before we announced the Shire deal.”
 
“What I don’t think is that we absolutely have an imperative to run out and do another $50 billion deal, and it’s unlikely we would do another $50 billion deal,” he said.
 
On the other hand, considering the company’s cash buildup, “we clearly have the wherewithal to be active on the M&A front,” Gonzalez said–assuming the right target comes along.
 
“We’re going to continue to look for those opportunities that strategically fit and give us a strong financial return,” he said, “and we’ll deploy our capital accordingly.”
 
By Carly Helfand
 

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