- AbbVie recently acquired Shire for $54 billion with the goal of diversifying its portfolio, gaining synergies and benefiting from tax-savings.
- When Shire relocated from the UK to Ireland, its effective tax rate (ETR) went from 36.9% to 20.6%.
- In addition to tax-savings, AbbVie will gain a broader portfolio of products that can help offset its reliance on Humira (adalimumab), which will go off patent in 2016 in the US.
Analysts at GlobalData noted that AbbVie’s ETR, which was 22.6% in 2013, will decrease with its recent acquisition of Shire and the relocation of its corporate headquarters to Ireland. The analysts quantified the impact by explaining that if AbbVie had already moved to Ireland in 2013, the company would have increased its yearly earnings by more than $350 million based on savings. Furthermore, GlobalData estimates that AbbVie could gain $8 billion in tax savings from Humira alone over the next 15 years.
However, tax-savings were not the only incentive for AbbVie's move. Currently, Humira accounts for almost 57% of AbbVie’s top-line sales. With that drug's patent expiry coming up in 2016 in the US and 2018 in other markets, the additional products gained through the Shire acquisition can help offset risk, while also growing revenues.