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Valeant to spend $1b on female libido drug

Sprout deal comes two days after pill is approved by FDA

WASHINGTON — Valeant Pharmaceuticals will pay about $1 billion in cash to buy Sprout Pharmaceuticals, the maker of the first prescription drug intended to boost sexual desire in women.

The deal comes two days after US regulators approved the pill Addyi, a milestone for the drug industry that could revive interest in medications for women’s sexual problems.

Founded by a husband-and-wife team, Sprout has aggressively pushed the case for their product for years, arguing in dozens of interviews that the Food and Drug Administration had unfairly overlooked women’s sexual disorders. But the company gave no hint of plans to sell the drug to a larger company.

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‘‘After all their talk about women’s health disparities, it’s time for Sprout’s founders to just take the money and run,’’ said Erik Gordon, a business professor at the University of Michigan.

Sprout CEO Cindy Whitehead responded Thursday that she would continue to lead Sprout, which will become a division of Valeant.

‘‘I’m not going anywhere and am very excited to continue working with our 34 employees,’’ Whitehead said in a statement.

Gordon and some other analysts predicted the buyout, noting that Sprout had only a few dozen employees in its Raleigh offices. Gordon said Valeant has the size and expertise to market the new pill.

‘‘Valeant is not a drug development company, they are a drug marketing company,’’ said Gordon. ‘‘They are famous for buying a company, closing down their research, and flogging the product.’’

The Canadian drugmaker has traditionally grown through acquisitions of companies in the dermatology, eye health, and neurology fields. The Sprout purchase expands Valeant’s portfolio into women’s health.

Still, the deal has its risks. In its approval this week, the FDA required Addyi to carry a warning label, and the once-daily pill’s modest benefit may limit its appeal.

The warning will alert doctors and patients to the risks of dangerously low blood pressure and fainting, especially when the pill is combined with alcohol.

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Under the safety plan, doctors will be able to prescribe Addyi only after completing an online certification process that requires counseling patients about the drug’s risks. Pharmacists also will need certification and be required to remind patients not to drink alcohol while taking the drug.

Still, Valeant is confident enough in the potential of the women’s sexual-dysfunction market that it’s already talking about other investments in the same area. The market for men’s erectile dysfunction is $4.3 billion and includes blockbuster drugs such as Pfizer’s Viagra, Eli Lilly’s Cialis, and Bayer’s Levitra, according to 2014 sales data by Symphony.

‘‘I think you can look to the market for erectile dysfunction to be somewhat similar in terms of size, which is a multibillion-dollar market on global basis,’’ Valeant’s chief executive Mike Pearson said. ‘‘It will take time to develop the market.’’

Valeant will be able to use its sales expertise to get Addyi to market quickly, said Alex Arfaei, an analyst at BMO Capital Markets. The company got a good price for a drug that’s the first of its kind in what could be a large market, he said. ‘‘However, we believe that uptake will be significantly lower than in [erectile dysfunction] given the safety issues with the product,’’ he said.

Sprout’s drug acts on brain chemicals that affect mood and appetite. The drug was actually acquired from German conglomerate Boehringer Ingelheim in 2011, after the FDA initially rejected the drug.

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Material from Bloomberg News was used in this report.