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Indevus Bulks Up Marketing Muscle

Indevus Pharmaceuticals (IDEV) has picked up a stronger marketing partner for its overactive bladder drug Sanctura XR.

Allergan (AGN), a specialty pharmaceuticals firm with annual revenue of around $3.5 billion, said Wednesday that it's buying privately held Esprit Pharma for $370 million in cash.

The centerpiece of the acquisition is the U.S. marketing rights to Sanctura XR, which Indevus had previously licensed to Esprit.

Sanctura XR has the potential to be the best-in-class drug to treat overactive bladder -- a $2 billion drug market. The challenge is marketing. So-called OAB drugs require a lot of it, something that Indevus and Esprit couldn't handle on their own, especially when the big competition comes from drugs sold by Big Pharma giants like GlaxoSmithKline (GSK) and Pfizer (PFE).

Allergan, however, is an experienced drug marketer, especially in eye care and dermatology. Selling genitourinary drugs like Sanctura XR is a new business for Allergan, but its sales expertise is likely what the drug needs to make a significant dent in the OAB market.

This optimism for Sanctura XR -- and therefore for Indevus -- don't seem to be on display in the company's stock price, however. Indevus shares were off 19 cents, or 2.6%, to $7.09 in recent trading, even as Allergan shares were up 81 cents, or 1%, to $63.03.

That's a bit hard to understand. If paying $370 million to gain control of U.S. rights to Sanctura XR is good for Allergan, logic suggests that the deal should also be good for Indevus, which will receive sales royalties from Allergan based on Sanctura XR revenue.

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