Botox-maker Allergan 'committed to Ireland' despite agreeing €55bn sale

Shares in AbbVie plummeted more than 15% after it announced it had reached an agreement to buy its Irish-tax domiciled rival. The proposed merger - forecast to complete by early next year - is the latest in an industry where some of the biggest companies have been willing to pay a high price to resolve questions about their future growth.

If successful, it will form the fourth biggest drugmaker in the world. Allergan's tax base will return to the US on completion of the deal.

Both companies have strong Irish footprints. AbbVie, which works on advanced therapies for some of the world’s most complex conditions, employs more than 700 people at five manufacturing and commercial sites across Ireland.

Its commercial headquarters is based in Dublin, while it has two manufacturing plants in Sligo and one in Cork. It expanded its two Sligo plants, in 2014 and last year, with respective spends of €85m and €113m, to boost its work around cancer treatment.

Allergan has been in Ireland since the late 1970s and employs more than 2,000 people here. A €65m investment in its Westport facilities, earlier this year, brought the company's total spend in Ireland to around €700m.

It is unclear, this early on, what impact on Irish-based jobs integration of the two companies might have. However, a spokesperson for Allergan Ireland said: "At this point in the process it is business as usual. It is too early to provide specific details on the impact of the deal in specific markets, other than to say that Allergan remains committed to Ireland.”

The proposed takeover offers a solution to long-standing challenges at both companies. AbbVie gets a set of products big enough to diversify its revenue from Humira, the rheumatoid arthritis injection that is the world’s biggest-selling drug worldwide, with about $20bn in sales last year.

Allergan, which is heavily reliant on Botox, will get a profitable exit for shareholders after a four-year slide.

However, the drop in AbbVie's shares is a sign that the takeover may not sail through without challenge. Earlier this year, Bristol-Myers Squibb faced opposition from some top investors to abandon its $74bn acquisition of Celgene. The deal eventually won the backing of a majority of shareholders, but Bristol-Myers shares are still trading well below their pre-deal value.

The expected cost savings from the AbbVie-Allergan deal will buy both companies more time but not solve their long-term issues. Both of their blockbuster drugs have begun to face pressure: AbbVie may be nearing the limits of how far it can boost Humira’s price as cheaper competitors come to market, a problem Allergan is already grappling with as more alternatives to Botox emerge.

The companies have developed several potentially promising medicines for a range of diseases, though so far none have convinced investors that they can attract the vast pool of patients that take medications like Humira.