Sprout’s pill for women received approval on Tuesday from the US Food and Drug Administration.

Bloomberg/San Francisco

Valeant Pharmaceuticals International agreed to pay about $1bn in cash for Sprout Pharmaceuticals, the US drug maker that this week received approval to sell a pill for low sexual health in women.
Valeant will also give closely held Sprout a share of future profits if certain milestones are achieved, according to a statement yesterday.
Buying Sprout would move Valeant, which specialises in eye care and dermatology, into the women’s health market. Valeant’s strategy is to grow through acquisitions. The company has announced 12 purchases in the past year valued at $14.9bn, according to data compiled by Bloomberg. The biggest is the $11.1bn purchase of Salix Pharmaceuticals for gastrointestinal disorder treatments.
Sprout’s pill received approval on Tuesday from the US Food and Drug Administration. The drug has been controversial due to modest benefits and serious side effects, and was caught up in a debate about whether male sex drugs have received more attention.
Valeant said it will use its “global scale” to market the drug internationally. The purchase will have no effect on earnings this year and will add to earnings in 2016, it said. Sprout chief executive officer Cindy Whitehead will join the company to lead the division.
Sprout acquired the rights for flibanserin for an undisclosed amount from Boehringer Ingelheim in 2011, after the FDA told Boehringer that the drug hadn’t been proven safe or effective. Sprout conducted new tests with new measures of how women’s sexual health was measured.
Hurdles in marketing the pill will include convincing insurers to cover it, and educating doctors and patients on the benefits and risks. Without insurance support, women may have to pay as much as $400 a month to try the pill, called Addyi, or flibanserin.
The FDA has said that doctors will have to take a training course to be certified to prescribe the drug, which will be available as soon as October 17. Patients must sign a form acknowledging risks that include fainting and extreme sleepiness. Humana, the fifth-largest US health insurer by market value, said yesterday that Addyi will fall into the same category as male drugs, which typically aren’t covered. Anthem, the third-largest, will cover the drug in its third tier, which means it will require higher copays than for generics and preferred brand-name drugs. UnitedHealth Group, Aetna and Cigna Corp said they’re studying Addyi.
US regulators had rejected the drug in 2013 for its modest effect, and then faced a backlash from some doctors and researchers who said the agency was being sexist. Drugs to treat male sexual health have become ubiquitous since Pfizer’s Viagra was approved in 1998.
Valeant will pay $500mn upon completion of the transaction, expected in the third quarter, and an additional payment of $500mn in the first quarter of 2016, plus a share of future profits.
Valeant, which is managed from the US, merged with Biovail Corp in 2010 and moved its legal address to Canada. Its acquisition record in the last 12 months is second only to Roche Holding of Switzerland in terms of the number of deals.