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 U.S. regulators approved the pill.
Valeant expects the pill, called Addyi, to be available in the United States in the fourth quarter. The acquisition of Sprout should close in this quarter.
The Food and Drug Administration's approval of Addyi on Wednesday was a milestone long sought by drugmakers, which have made billions off impotence drugs for men.
For decades, pharmaceutical companies have tried unsuccessfully to develop a female equivalent to Viagra, the blockbuster drug that treats men's erectile dysfunction by increasing blood flow. But disorders of women's sexual desire have proven resistant to drugs that act on blood flow, hormones and other simple biological functions.
Sprout's drug acts on brain chemicals that affect food and appetite. The approval of Addyi, known generically as flibanserin, marks a turnaround for the FDA, which previously rejected the drug twice due to lackluster effectiveness and side effects.
Sales of the drug are expected to be affected by a strong warning label attached to it and an FDA-imposed safety plan for prescribing. 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.
Under the safety plan, doctors will only be able to prescribe Addyi 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.
Valeant plans to pay about $500 million at closing for Raleigh, North Carolina-based Sprout. The Canadian drugmaker will then make another milestone-based payment of around $500 million in the first quarter of next year.
Privately held Sprout, which was spun off from Slate Pharmaceuticals, has been focused solely on developing a treatment for hypoactive sexual desire disorder. The drugmaker will become a division of Valeant. CEO Cindy Whitehead will join Valeant to oversee Addyi's global rollout.