It lasted nearly a year.Abbvie(AbbVie) versusAl Jian(Allergan) the marriage of the rich and powerful families is finally settled!

On May 8, US time, Aberdeen announced the completion of its plan to acquire Eljian for US $63 billion. In terms of revenue, the merger of the two companies will exceedNovartis和MerckTo become the fourth largest pharmaceutical manufacturer in the world, and will also become the world's largest "giant" company with prescription drug sales surpassing Pfizer Inc.

Under the terms of the deal, the shares held by Elgin shareholders at a consideration of $193.23 each will be converted into 0.8660 Aberdeen shares and $120.30 in cash (based on Aberdeen's closing price of $84.22 on May 7, 2020). After today's close, Elgin's common shares have stopped trading on the New York Stock Exchange.

It is reported that when the deal is completed, Erjian will officially change its name to Eljian Aesthetics (Allergan Aesthetics), and the parent company will be Aberdeen.

Aberdeen and Eljian reached an acquisition agreement as early as June last year. However, although the two companies have long been in love with each other, the outside world still takes a wait-and-see attitude towards the cooperation. The main reason is that Pfizer Inc also planned to buy Aijian for $160 billion in 2015, but the earth-shattering merger of the largest pharmaceutical company in history failed at a critical stage because of the intervention of the US government.

From a small pharmacy to Big Mac, the history of Erjian's family getting rich is like a history of integrated mergers and acquisitions. According to incomplete statistics, now Erjian's "belly" has installed more than 40 pharmaceutical companies, in the "buy" to build their own business empire, but also make themselves "missed" by a large number of pharmaceutical company bosses. However, after the construction of high-rise buildings, Erjian has also faced a situation of development turmoil in recent years, and now the successful marriage of Aberdeen is like catching an olive branch in a dilemma.

The story begins with "before" and "after" Erjian.

To be exact, the family history of Erjian today should be divided into two parts:

The first part is the usual version of the legend, that is, the history from Watson to Allergan plc.

Another part is the history of the "former" Eljian Allergan, Inc itself.

(1) the history of Watson's family getting rich

In the mid-19th century, a young man named Allen Chao (Chinese-American) worked in his parents' Taiwanese pharmaceutical company when he was young. In 1984, after completing a doctorate in pharmacology in the United States and working at G.D. Searle for 10 years, Allen Chao borrowed $4 million from friends and family to start Watson Pharmaceuticals. At the end of the same year, furosemide, the first generic drug of Watson Pharmaceuticals, was approved by FDA, which brought profits to the company after one year on the market.

Watson, which benefited from generics, began planning to go public in 1993, when the company had sales of more than $71 million and had more than 50 ANDA approvals.

In 1994, Watson's sales of generics further increased to $90 million. In order to expand its competitive advantage, Watson Pharmaceuticals "smashed pots and sold iron" to buy its own-sized competitor Circa Pharma, which cost $600m and the company's total assets were only $260 million. This acquisition has greatly increased the strength of Watson.

In 1995, sales of Watson Pharmaceuticals increased to $152 million, with a total of more than 80 ANDA accounts. Since then, Watson Pharmaceuticals has become one of the few generic drug companies in the United States.

In 1997, Watson bought Oclassen Pharma's dermatology brand medicine for US $135 million, and in the same year, it won the agency of G.D. Searle Co's gynecological medicine and began to set foot in the obstetrics and gynecology pipeline.

In 2006, Watson acquired Andrx pharma by smashing pots and selling iron, making it the third largest generic drug company in the United States.

In 2012, Watson acquired the privately held Swiss group Actavis, named after Actavis, and expanded its drug pipeline in gynecology, digestion and urology.

After Actavis acquired Allergan,Inc in June 2015, it sold its generics business to Israeli companies.Ladder tileAnd the remaining specialty drug company is named Allergan plc.

(2) the history of the development of "former" Allergan,Inc

Elgin grew up from a small pharmacy in Los Angeles in 1948 and expanded into a global company in 1970.

In 2002, Erjian's Botox (botulinum toxin A) was approved to improve frown lines and become a household name.

In March 2006, Erjian completed the acquisition of Medical Nome, which added breast beauty products, dermal fillers and obesity intervention products, ranking first in the world in terms of medical beauty product line.

In 2007, Erjian acquired Groupe Corn é al Laboratories, solidifying the global market position of Qiaoyadeng (hyaluronic acid) and other new generation hyaluronic acid dermal fillers. As a result, Eljian has been able to create a comprehensive, high-tech overall line of young beauty products, including Botox? Medical beauty products, Qiao Yadeng? Injectable sodium hyaluronate gel series products, collagen dermal fillers, LATISSE? (meprostol) 0.03% (prescription drugs to promote eyelash growth).

In June 2014, Erjian suffered a hostile takeover by William Ackman, head of Pershing Square Capital Management, a joint investment fund of Canadian drugmaker Valeant. The latter asked Erjian to call an extraordinary general meeting of shareholders with an offer of up to $54 billion in an attempt to kick out six board members and force Erjian to accept a hostile bid. Erjian, who did not want to sit back and wait for his death, launched a counterattack. Two months later, Erjian spent $587 million to acquire TARIS's LiRIS drug delivery system project for interstitial cystitis / bladder pain syndrome. In addition to supporting Erjian's urological R & D pipeline, the acquisition is also an active expansion to counter hostile takeovers. In the end, the melon twisted is not sweet, and Valeant did not get what he wanted.

In 2015, the Actavis Group completed its acquisition of Eljian for $70.5 billion, ending the hostile takeovers of Valeant and Pershing Square. After the acquisition, the company changed its name to Allergan plc.

The dream didn't come true, and he missed Pfizer Inc.

The combined Elgin product portfolio focuses on four areas: medical cosmetology, ophthalmic care, central nervous system and gastroenterology. Among them, especially in the medical and beauty industry, Eljian dominates the world, and its star products Botox (thin facial needle) and Joaden? (Juv é derm, hyaluronic acid) have created the myth of the medical and beauty industry, firmly occupying the first dominant position in the world, especially Botox? The global share was once as high as 86%.

It is precisely because the rich R & D pipelines in the above areas do not overlap with most pharmaceutical giants, and have taken the lead in the field of advantages, Al has built a popular cake that is "missed" by a large number of bosses.

Not long after the establishment of the new Erjian, big buyer Pfizer Inc set his sights on this big cake. Pfizer Inc hopes to buy Aijian in an all-stock deal at the end of 2015, with a total value of about $160 billion. If this acquisition is successful, it will be the largest acquisition in the history of the pharmaceutical industry and the largest pharmaceutical company in the world.

Pfizer Inc also has ulterior motives in this transaction. Previously, New Elgin became an American-Irish company as a result of the acquisition of the Actavis Group. After merging with Eljian, Pfizer Inc can move his headquarters to Ireland and enjoy Ireland's ultra-low corporate income tax rate of 12.5 per cent, while Pfizer Inc's corporate tax rate in the US was 35 per cent, the highest in the world. However, Pfizer Inc's wishful thinking was severely cracked down by the US government. As the US Treasury introduced new measures to curb transactions related to tax avoidance, Pfizer Inc finally gave up the marriage of the century and unilaterally paid Aijian a "break-up fee" of $150 million.

After being lovelorn Pfizer Inc, Aijian continues to open the mode of "buying and buying". It is reported that in the past two years, Erjian launched more than 10 acquisitions, of which large-scale deals include:

In September 2016, Eljian Medical acquired Tobira Therapeutics, a biopharmaceutical company, for $1.7 billion, winning two drug candidates for nonalcoholic steatohepatitis.

In November 2016, Erjian spent 1.52 billion US dollarsAstraZeneca PLCSubsidiary MedImmune has reached a cooperation agreement to distribute monoclonal antibodies for the treatment of moderate and severe ulcerative enteritis. In the same month, Erjian bought Chase Pharmaceut for $1 billion, acquiring two general-purpose APIs.

In February 2017, Erjian bought LifeCell, an American specialist in regenerative medicine, for $2.9 billion. Regeneration of LifeCellmedicineBusiness and Erjian's medical beauty can have a synergistic effect.

In April 2017, Eljian bought Zeltiq Aesthetics for $2.48 billion, adding a system to the product line of beauty drugs, which Eljian said could help you lose weight in a freeze-dissolving way.

But at this time, the "buy-and-buy" model has been unable to hide the decline of Erjian's performance.

With the marriage of Aberdeen, "Eljian Aesthetics" was officially born.

In June 2019, Aberdeen announced that it would buy Eljian in the form of cash and stock transactions for $63 billion. On the news, Aijian's share price soared 28% and began to pick up gradually. As of press time, Erjian's share price reached 193.02 US dollars per share.

Why did Elgin's shareholders still be overjoyed when his fortune fell from $160 billion to $63 billion? In fact, Erjian is no longer what it used to be. Since the summer of 2015, Erjian's share price has fallen from more than $330 to $115. This is mainly due to the rapid expansion of Erjian while facing a series of setbacks such as intensified generic drug competition, acquisition failure, drug clinical failure and so on.

1. The competition of generic drugs has intensified and the performance has declined. According to the data, Eljian's revenue in 2018 was $15.787 billion, down 0.96% from the same period last year, and its net profit fell 16.78% to minus $5.143 billion. In 2018, generic versions of Elgin's estradiol valerate tablet Estrace, Alzheimer's drug Namenda and benign prostatic hyperplasia drug Rapaflo went on sale, and its blockbuster dry eye treatment product, Restasis, is about to lose patent protection.

2. The dominant position of star products is threatened. Erjian's "Cash Cow" Botox? At present, 26 indications for the prevention of chronic migraine, overactive bladder and spasmodic torticollis have been approved and listed in more than 100 countries or regions. However, it is precisely because it is involved in a wide range of fields, Botox? While dominating the world, many competitive drugs are entering the market, such asEvolus Inc. Jeauveau,NestleThe Xeomin of Dysport and Merz Group, andAmgen Inc Ltd., Teva Pharmaceuticals andEli Lilly and CoThe company's calcitonin gene-related peptide inhibitors, etc., all give Botox? It poses a great threat, and its market share has fallen from a peak of 87% to about 65%.

3. Clinical research and development have failed one after another. clinically, Erjian has also suffered a number of setbacks in recent years, among which the biggest impact is the failure of the key III project of rapastine, an antidepressant obtained by Erjian after its acquisition of Naurex with US $560 million, which is regarded by many investors as the next blockbuster drug, so its investment confidence has been greatly undermined.

After a series of upheavals, investors liked the fact that Erjian was finally successfully sold to Aberdeen again. This is also seen as a mutual warming between two companies that rely heavily on a single product. It is well known that Abercrombie has the world's best-selling drug Humira, which sold more than $19.1 billion in 2019, contributing more than 57% of its income, compared with 2018. Income has declined. Now, Xiu Merlot? It is also faced with the bloody competitive dilemma of "patent expiration".

As a result, Aberdeen's acquisition of Aijian is also in strong demand, in addition to being able to make Alcon's Botox? Income at home and abroad, to further improve the plight of single product dominance, but also can enrich the company's product line. Judging from the product lines of the two companies, Aberdeen is mainly focused on immunity and blood cancer, while Erjian focuses on medical cosmetology and ophthalmology products, with little overlap, so the new company after the merger of the two companies will be more diversified. Revenue of the combined company is expected to exceed $50 billion.

It is worth noting that after the merger, Erjian will officially change its name to Allergan Aesthetics, and Aberdeen will be the parent company.

Al is built in China.

Although on the whole, Erjian's development in recent years seems to be ill-fated, it has developed like a raging fire in the Chinese market in recent years. Erjian's market is divided into the United States market and the global market (all markets except the United States), and China has become the second largest market in Eljian's global market.

As early as 2009, Erjian has introduced its full range of ophthalmology products to China. Today, Erjian's business in China is mainly medical beauty and ophthalmology, in addition, central nervous system, digestive products are also constantly landing.

Medical beauty is Erjian's most potential business sector in China. According to the 2018 China Medical Beauty O2O Market Analysis released by Deloitte China, the growth rate of China's medical beauty market is expected to remain above 20% in the next five years, and the market size may exceed 480 billion yuan in 2022.

At present, Elgin's main products listed in China are star products Botox (Botox, thin face needle), Joaden? (Juv é derm, hyaluronic acid) and breast implants Naqili and McGonagall. Almost all of these are the top products in China's medical and aesthetic industry, which are household names.

With the development of appearance economy, Erjian, as an upstream manufacturer of medical beauty, is striving to provide Chinese consumers with solutions and personalized services that keep pace with the times, and make frequent moves in China.

After Erjian's first innovation center is located in Chengdu in April 2019, more than 3000 doctors will be trained each year.

On September 7, 2019, the Eljian Institute of Beauty, the world's first experience center facing consumers directly, was officially opened in the Chengdu Global Center, dedicated to creating a cognitive education for medical and aesthetic consumers.SustainablePlatform to promote the popularization of medical and beauty consumer education and enhance the experience. In addition, Erjian also joined hands earlier.Alibaba Health Information TechnologyThe digital medical platform was launched, which opened up the online and offline platforms for consumers.

From a series of actions, it is not difficult to see Erjian's determination to standardize China's market order and improve the professional level of the industry. In addition, Erjian's ophthalmology business in China is also full of stamina.

2019, Eljian OphthalmologyInnovative drugsOzurdex, a dexamethasone intravitreal implant, has been approved to be listed in China and included in health insurance.

In March 2020, Erjian "glaucoma drainage tube" was approved to be listed in China, which is the first medical device product that uses real-world data in China.

In May 2020, Erjian signed a strategic cooperation agreement with JD Health and Wei Doctor. The three parties take glaucoma as a starting point to enable patients to use the Internet platform at home to achieve medical treatment, drug purchase and other services.

……

Tamping the Chinese market has become an inevitable strategic choice for Erjian's long-term development. Now that the marriage between Aberdeen and Eljian is about to be completed, what changes will the marriage bring to the global pharmaceutical pattern, and what new vitality will it inject into the Chinese market? We'll see.