AbbVie (ABB) has announced that it will spend about $21 billion  to acquire Pharmacyclics (PCYC) in a mixed cash and stock deal, valuing PCYC stock at just above $261/share. AbbVie will now have access to Pharmacyclic's cancer drug pipeline, especially its main big selling drug for blood cancer known as Imbruvica. The drug Imbruvica is a BTK inhibitor specifically built to inhibit the activity of B-cell malignancies. Typically B-cells in the body are "immune cells" that use antibodies to protect people's bodies against diseases. The problem is that sometimes these B-cells mutate into cancerous cells that spread in the body and cause it harm. Imbruvica targets the BTK protein which is responsible for regulating B-cells in the body. By manipulating the BTK protein Imbruvica can help increase the survival rate of patients.

AbbVie was searching for a deal with some type of pharmaceutical company. Back in October of 2014 the $54 billion merger between AbbVie and Shire fell through. AbbVie needed this deal with Pharmacyclics because the company is facing a lot of problems with patents expiring. One such popular drug set for patent expiration in December of 2016 is the company's lead inflammatory drug Humira. While AbbVie won't have a problem until a competitor reproduces the popular drug a few years later the company is probably thinking for the long term. Acquiring Pharmacyclics now is a proactive move that will keep AbbVie's profit from dropping off in a few years. 

Pharmacyclics has been doing well with its Imbruvica drug because it has been selling quite well. Imbruvica  produced Q4 2014 sales of $185 million, which is a 31% increase from Q3 2014. In addition this product sales revenue came in above the consensus of multiple analysts' estimates by over $20 million. This purchase of Pharmacyclics by AbbVie marks the first big pharmaceutical acquisition deal in 2015. Of course as always the pharmaceutical sector has many companies looking to fill their pipelines with looming patents expiring so expect further deals to occur in the coming months. In particular, three companies were said to be in the running to acquire PCYC, with rumors of a different acquirer involving Johnson & Johnson (JNJ)(a 50% partner with PCYC in Imbruvica) and Novartis (NVS). Investors are now watching other small biotechs that might be appealing acquisitions for big pharma.