Mallinckrodt Pharmaceuticals is set to acquire Questcor Pharmaceuticals for $5.6 billion in cash and stock. Mallinckrodt is purchasing Questcor in order to acquire the company's MS drug, Acthar Gel — a move that should help the company achieve its goal of becoming a specialty pharmaceutical company. This medication is expected to have sales of more than $1 billion this year. While some analysts questioned whether Mallinckrodt was concerned about generic competition and a federal investigation into Questcor’s promotional practices, Mallinckrodt assures that it is confident in its decision to acquire Questcor.
According to the New York Times Dealb%k, Questcor has been criticized in recent years for their price increases on the MS drug. Ten years ago, the price of Acthar Gel was $40 a vial. Today, the price stands at $28,000 per vial. Questcor initially acquired the drug from Aventis in 2001 for $100,000, and in 2013 drug sales from Acthar Gel garnered over $760 million — a 50 percent jump from 2012. The drug accounts for almost all of Questcor's revenues.
Questcor has faced regulatory issues in recent years, and the Securities and Exchange Commission is currently investigating the company's marketing practices. Back when it was acquired, Acthar was primarily used to treat a rare disease that affected babies. However, since then, the company has been aggressively marketing the drug as a treatment for other conditions, including multiple sclerosis, the kidney disorder nephrotic syndrome, and rheumatic diseases like lupus. The drug was approved to treat these conditions, though this approval occurred decades ago before approval requirements became stricter. Indeed, the company did not have to conduct clinical trials. Questcor has since disclosed that the Justice Department and the Securities and Exchange Commission are looking into its promotional practices.
Regardless of these investigations, Mallinckrodt's CEO Mark Trudeau released a statement on the acquisition expressing confidence in the new arrangement. “We believe this transaction will provide a strong and sustainable platform for future revenue and earnings growth, and provide exceptional value for shareholders of both Mallinckrodt and Questcor,” said Trudeau. “Obviously, we feel quite good about Acthar and the Questcor business going forward. Our sense is that Acthar has significant durability in the marketplace.”
In the press release regarding the acquisition found on the Mallinckrodt website, the company highlighted that Questcor’s commercial operations will function as a separate business unit within Mallinckrodt’s Specialty Pharmaceuticals segment.