Valeant Pharmaceuticals is buying Sprout Pharmaceuticals, owner of the world’s first female low libido pill, for $1 billion.

The Canadian firms have reached a definite agreement under which Valeant will acquire Sprout on a debt-free basis in an all-cash deal, that also includes a share of future profits based on certain milestones. 

The terms state that Valeant will pay around $500 million, subject to customary purchase price adjustments, upon the closing of the transaction, and an additional $500 million in the first quarter of next year.

News of the deal comes just two days after Sprout’s Addyi (flibanserin) won US clearance for the treatment of hypoactive sexual disorder in premenopausal women, in a world first.

The drug, which is dubbed the 'female Viagra', should be available in the fourth quarter through certified prescribers and pharmacies, and Valeant said it will leverage its global scale to register Addyi internationally.

"Delivering a first-ever treatment for a commonly reported form of female sexual dysfunction gives us the perfect opportunity to establish a new portfolio of important medications that uniquely impact women,” noted Valeant's chairman and chief executive J. Michael Pearson, explaining the firm’s interest in the deal.