Abbott Labs acquires Alza for $ 7.3 billion

Our Corporate Bureau
24 June 1999

Won''t they ever stop? The mergers in the pharmaceuticals business, that is? Not yet, it seems.

The latest news on this front is that Abbott Laboratories of North Chicago, Illinois, is acquiring Alza Corp., also of the US. It is paying for the purchase in stock worth $7.3 billion. The deal will involve the exchange of Abbott and Alza shares in the ratio of 1.2 to 1.

The deal will give Abbott, known for its antibiotics and ulcer drugs, new products to bolster its sales. The Palo Alto, California based Alza is a leader in 'sustained-release' drugs, used mainly in cancer and urology therapies. Among its best known products are Ditripan XL, an incontinence drug, and Doxil, an ovarian cancer treatment product.

Alza also has products it has licensed out to other companies. These include products such as SmithKline Beecham''s Nicoderm anti-smoking patch. These licensed products bring a substantial amount of royalties to the Alza kitty, which will now accrue to Abbott. Alza also has several new products in the pipeline, it is reported.

Abbott's wide range of products include diagnostic products used in medical screening, injectable hospital products, the Similac infant formula, Murine eye-care products, ulcer remedies and antibiotics. The company got a big boost in the early and mid-1990s from its anti-AIDS medicine Norvir. But that momentum has been lost since then.

As a result, Abbott, whose under-funded research and development efforts have not been able to produce new blockbusters, badly needed new products. The Alza acquisition does just that -- broaden its product portfolio.