Allergan, Inc., is a global specialty pharmaceutical company. Their product ranges include ophthalmic pharmaceuticals, dermatology products, and neurological products.
Allergan, Inc. (Allergan), incorporated in 1977, is a multi-specialty health care company focused on developing and commercializing pharmaceuticals, biologics, medical devices and over-the-counter products. The Company discovers, develops and commercializes specialty pharmaceutical, biologics, medical device and over-the-counter products for the ophthalmic, neurological, medical aesthetics, medical dermatology, breast aesthetics, obesity intervention, urological and other specialty markets in more than 100 countries globally. Its business model includes products for which patients may be eligible for reimbursement and cash pay products that consumers pay for directly. It sells its products directly through its own sales subsidiaries in 36 countries and additionally through independent distributors in over 100 countries globally. On January 15, 2010, the Company completed the acquisition of Serica Technologies, Inc. In March 2010, it reacquired the rights from GlaxoSmithKline (GSK) to develop and sell Botox in Japan and the People’s Republic of China. On July 1, 2010, it completed a business combination agreement and effected a revised distribution agreement with its distributor in Turkey. In September 2010, it acquired from Vistakon Pharmaceuticals, LLC, Janssen Pharmaceutica N.V., Beerse and Johnson & Johnson Vision Care Inc. the global license to manufacture and commercialize alcaftadine 0.25%, a topical allergy medication for the prevention and treatment of itching associated with allergic conjunctivitis.
The Company operates in two segments: specialty pharmaceuticals and medical devices. The specialty pharmaceuticals segment produces a range of pharmaceutical products, including ophthalmic products for dry eye, glaucoma, retinal diseases and ocular surface disease; Botox for certain therapeutic and aesthetic indications; skin care products for acne, psoriasis, eyelash growth and other prescription and over-the-counter skin care products, and urologics products. The medical devices segment produces a range of medical devices, including breast implants for augmentation, revision and reconstructive surgery; obesity intervention products, including the Lap-Band System and the Orbera Intragastric Balloon System, and facial aesthetics products. Its products are sold to drug wholesalers, independent and chain drug stores, pharmacies, commercial optical chains, opticians, mass merchandisers, food stores, hospitals, group purchasing organizations, integrated direct hospital networks, ambulatory surgery centers and medical practitioners, including ophthalmologists, neurologists, physiatrists, dermatologists, plastic and reconstructive surgeons, aesthetic specialty physicians, bariatric surgeons, pediatricians, urologists and general practitioners.
Specialty Pharmaceuticals Segment
The Company develops, manufactures and markets a range of prescription and non-prescription products designed to treat diseases and disorders of the eye, including chronic dry eye, glaucoma, inflammation, infection, allergy and retinal disease. The Company’s Restasis (cyclosporine ophthalmic emulsion) 0.05% is a prescription therapy for the treatment of chronic dry eye globally. During the year ended December 31, 2010, Health Canada approved Restasis for the treatment of aqueous deficient dry eye disease. As of December 31, 2010, Restasis was approved in 41 countries. Its over-the-counter artificial tears products include the Refresh and Refresh Optive brands, treat dry eye symptoms including irritation and dryness due to pollution, computer use, aging and other causes. The segment of the market for ophthalmic prescription drugs is for the treatment of glaucoma, a sight-threatening disease typically characterized by elevated intraocular pressure leading to optic nerve damage. Lumigan 0.03% and Lumigan 0.01% are topical treatments indicated for the reduction of elevated intraocular pressure in patients with glaucoma or ocular hypertension. As of December 31, 2010, it sold Lumigan 0.01% and Lumigan 0.03% in the United States and over 75 countries globally. During 2010, the Food & Drug Administration (FDA) approved Lumigan 0.01% as a therapy indicated for the reduction of elevated intraocular pressure in patients with open-angle glaucoma or ocular hypertension. During 2010, combined sales of Lumigan 0.03%, Lumigan 0.01% and Ganfort represented approximately 11% of its total consolidated product net sales.
The Company’s ophthalmic solutions are Alphagan, Alphagan P 0.15% and Alphagan P 0.1%. These products lower intraocular pressure by reducing aqueous humor production and increasing uveoscleral outflow. Alphagan P 0.15% and Alphagan P 0.1% are improved reformulations of Alphagan containing brimonidine, the active ingredient in Alphagan, preserved with Purite. As of December 31, 2010, it marketed Alphagan, Alphagan P 0.15% and Alphagan P 0.1% in over 70 countries globally. A generic form of Alphagan is sold in a range of other countries, including Canada, Mexico, India, Brazil, Colombia, Argentina and in the European Union. The Company is developing the ophthalmic solution Combigan, a brimonidine and timolol combination for the treatment of glaucoma and ocular hypertension in patients. As of December 31, 2010, Combigan is sold in 67 countries globally. During 2010,combined sales of Alphagan, Alphagan P 0.15% and Alphagan P 0.1% and Combigan represented approximately 8%of its total consolidated product net sales. Its ophthalmic anti-inflammatory product Acuvail (ketorolac tromethamine ophthalmic solution) 0.45% is an advanced unit-dose preservative-free formulation of ketorolac for the treatment of pain and inflammation following cataract surgery. Its ophthalmic anti-inflammatory product Acular LS (ketorolac ophthalmic solution) 0.4% is a version of Acular that has been reformulated for the reduction of ocular pain, burning and stinging following corneal refractive surgery. Its ophthalmic anti-inflammatory product Pred Forte is a topical steroid.
The Company’s anti-infective is Zymar (gatifloxacin ophthalmic solution) 0.3%, which it licenses from Kyorin Pharmaceutical Co., Ltd. and has global ophthalmic commercial rights, excluding Japan, Korea, Taiwan and other countries in Asia and Europe. During 2010, it received FDA approval of Zymaxid (gatifloxacin ophthalmic solution) 0.5%, its anti-infective product indicated for the treatment of bacterial conjunctivitis. In February 2011, it discontinued Zymar. The Company licenses Elestat from Boehringer Ingelheim AG, and holds global ophthalmic commercial rights, excluding Japan. Elestat is used for the prevention of itching associated with allergic conjunctivitis. During 2010, Elestat (together with sales under its brand names Relestat and Purivist) is approved in 49 countries. Alcaftadine is FDA-approved in the United States under the brand name Lastacaft (alcaftadine ophthalmic solution) and was commercialized in January 2011. Ozurdex is a bioerodable formulation of dexamethasone in the Company’s Novadur sustained-release drug delivery system that can be used to locally and directly administer medications to the retina. During 2010, the European Medicines Agency granted marketing authorization for Ozurdex in the 27 member states of the European Union. During 2010, the FDA approved Ozurdex for the treatment of non-infectious ocular inflammation, or uveitis, affecting the posterior segment of the eye.
The Company’s neuromodulator product, Botox (onabotulinumtoxinA) treats a range of therapeutic conditions, as well as for aesthetic. Marketed as Botox, Botox Cosmetic, Vistabel, Vistabex and Botox Vista depends on the indication and country of approval. During 2010, its product was approved in approximately 80 countries for up to 21 indications. During 2010, sales of Botox represented approximately 29% of its total consolidated product. Botox has been used therapeutically for the treatment of certain neuromuscular disorders. During 2010, the FDA approved Botox for the prophylactic treatment of headaches in adults with chronic migraine. In many countries outside of the United States, Botox is approved for treating hemifacial spasm, spasticity associated with pediatric cerebral palsy and upper limb spasticity in post-stroke patients. As of December 31, 2010, it was in development for Botox in the United States and Europe for new indications, including lower limb spasticity, neurogenic overactive bladder, idiopathic overactive bladder and benign prostatic hyperplasia. During 2010, the Company received approval for Botox for the prophylactic treatment of headaches in adults with chronic migraine in the United Kingdom. During 2010, it completed enrollment in its phase- III clinical trials for the use of Botox to treat idiopathic overactive bladder. As of December 31, 2010, more than 60 countries had approved facial aesthetic indications for Botox, Botox Cosmetic, Vistabel, Vistabex or Botox Vista. In Australia, New Zealand, Canada and certain countries in East Asia and Latin America, it has regulatory approvals for upper facial lines, including crow’s feet. It sponsors aesthetic specialty physician training in approved countries. During 2010, it received approval of Botox in Japan for the treatment of upper and lower limb spasticity.
The Company’s skin care product lines focus on the acne, psoriasis, physician-dispensed skin care and eyelash growth markets, particularly in the United States and Canada. Aczone (dapsone) gel 5% is approved for sale in both the United States and Canada and is indicated for the treatment of acne vulgaris in patients age 12 and older. Aczone contains chemical entity (dapsone) for acne treatment since Tazorac (tazarotene) gel. In February 2011, it outlicensed its Canadian rights to Aczone to Biovail Laboratories International SRL, a subsidiary of Valeant Pharmaceuticals, Inc. The Company sells Tazorac (tazarotene) gel in the United States for the treatment of acne and plaque psoriasis. It also markets a cream formulation of Tazorac in the United States for the topical treatment of acne and for the treatment of psoriasis. Avage (tazarotene) cream is indicated for the treatment of facial fine wrinkling, mottled hypo- and hyperpigmentation, or blotchy skin discoloration, and benign facial lentigines, or flat patches of skin discoloration, in patients using a comprehensive skin care and sunlight avoidance program. It develops and markets glycolic acid-based skin care products. It markets its M.D. Forte line of alpha hydroxy acid products to physicians in the United States. Prevage MD is a clinically tested antioxidant designed to reduce the appearance of fine lines and wrinkles, as well as provide protection against environmental factors, including sun damage, air pollution and cigarette smoke. It markets Prevage MD to physicians in the United States. Vivite is an anti-aging skin care line that uses GLX Technology, creating a blend of glycolic acid and natural antioxidants. It markets its Vivite line of skin care products to physicians in the United States. Latisse (bimatoprost ophthalmic solution) 0.03%, is FDA-approved prescription treatment of insufficient or inadequate eyelashes. Latisse is a once-daily prescription treatment applied to the base of the upper eyelashes with a sterile, single-use-per-eye disposable applicator. The Company’s Sanctura XR is a once-daily anticholinergic for the treatment of over-active bladder (OAB). During 2010, Health Canada approved Sanctura XR. It promotes Sanctura XR to the urology specialty channel.
The Company competes with Alcon Laboratories, Inc./Novartis AG, Bausch & Lomb Inc., Genentech/Hoffman La Roche AG, Inspire, Ista Pharmaceuticals, Inc., Merck & Co., Inc., Pfizer Inc., Santen Seiyaku, Sandoz, Inc., PharmaForce, Inc., Apotex Inc., Hi-Tech Pharmacal Co., Barr Laboratories, Inc., Elan Pharmaceuticals, Solstice Neurosciences Inc., Ipsen Ltd., Medicis Pharmaceutical Corporation, Nestle, L’Oreal Group, Galderma, Q-Med A.B., Merz Pharmaceuticals, Bioform Medical Inc., Anteis S.A., Johnson & Johnson, Medy-Tox Inc., Sanofi-Aventis, Galderma, Medicis, GSK, Merck & Co., Inc., Obagi Medical Products, Inc., SkinMedica, Inc., Valeant Pharmaceuticals International, Watson Pharmaceuticals, Inc., Warner Chilcott PLC and Astellas Pharma US, Inc.
Medical Devices Segment
The Company’s silicone gel and saline breast implants, consist of a range of shapes, sizes and textures, has been available to women in more than 60 countries for breast augmentation, revision and reconstructive surgery. Its breast implants consist of a silicone elastomer shell filled with either a saline solution or silicone gel with a range of cohesivity. It markets its breast implants under the trade names Natrelle, Inspira, and CUI and BioCell, MicroCell and BioDimensional. It sells saline breast implants in the United States and globally for use in breast augmentation, revision and reconstructive surgery. Its Breast Implant Follow-Up Study (BIFS) provide data on a number of endpoints including long-term local complications, connective tissue disease issues, neurological disease issues, offspring issues, reproductive issues, lactation issues, cancer, suicide, mammography issues and to study magnetic resonance imaging compliance and rupture results. The Company sells a range of tissue expanders for breast reconstruction and also as an alternative to skin grafting to cover burn scars and correct birth defects. It develops, manufactures and markets dermal filler products designed to improve facial appearance by smoothing wrinkles and folds. Its facial aesthetics product is the Juvederm dermal filler family of products. Its Juvederm dermal filler family of products, including Juvederm, Voluma and Surgiderm are developed using its Hylacross technology. In Europe, it markets various formulations of Juvederm, Voluma and Surgiderm for wrinkle and fold augmentation. The Juvederm dermal filler family of products are approved or registered in over 34 countries. During 2010, it launched Juvederm Ultra XC and Ultra Plus XC, each formulated with lidocaine.
The Company develops, manufactures and markets medical devices for the treatment of obesity. Its principal product in this area, the Lap-Band System, is designed to provide minimally invasive long-term treatment obesity and is used as an alternative to more invasive procedures such as gastric bypass surgery, sleeve gastrectomy, stapling or gastric imbrications. The Lap-Band System is an adjustable silicone band that is laparoscopically placed around the upper part of the stomach through a small incision, creating a small pouch at the top of the stomach. The Lap-Band AP System has 360-degree Omniform technology, which is designed to distribute pressure throughout the band’s adjustment range. The Lap-Band AP System comes in two sizes, standard and large. In February 2011, the FDA approved the use of the Lap-Band System for weight reduction in obese adults. The Company sells the Orbera Intragastric Balloon System, which is a non-surgical alternative for the treatment of overweight and obese adults. The Orbera System includes a silicone elastomer balloon that is filled with saline after transoral insertion into the patient’s stomach to reduce stomach capacity and create an earlier sensation of fullness. The Orbera System is removed endoscopically within six months of placement. Its FloWatch technology powers the EasyBand Remote Adjustable Gastric Band System or EasyBand, a telemetrically-adjustable gastric banding device for the treatment of morbid obesity. The EasyBand, like the Lap-Band System, is implanted laparoscopically through a small incision.
The Company competes with Mentor, Silimed, Arion, BioSil Ltd, Cereplas, Eurosilicone, Nagor, Poly Implant Prostheses, Polytech, Johnson & Johnson, Helioscopie SA, Silimed and Spatz FGIA, Inc., Medicis, Merz, BioForm, Sanofi-Aventis, Q-Med, Teoxane and Anteis.
Allergan again became a public company in 1989, when SmithKline merged with Beecham Corporation, spinning off distribution of Allergan to shareholders. The transition period posed problems for Allergan, which had high costs, inefficient manufacturing systems, gaps in new product development, and large debt. The eye care market was no longer growing at the dramatic pace of the 1980s. Sales had moved away from traditional contact lenses, as disposable lenses and fashion glasses--neither of which were sold by Allergan&mdashøok the industry lead. With ophthalmologists spending less, Allergan's diagnostic equipment business also was experiencing little profit.
Allergan's business strategy had become unmanageable because it forced the company to compete over too broad a range of business sectors: from pharmaceuticals to consumer products to diagnostic eye care instruments. In 1990 Allergan was close to a billion-dollar company, but its stock had fallen from $25 a share (at the time of its spinoff) to $15 a share. Investment analysts began to advise investors that Allergan was prime for a takeover, pointing to Nestlé's Alcon Laboratories as a potential purchaser.
Allergan changed its business strategy to reflect market needs in the early 1990s. Under the leadership of president and CEO William Shepherd, Allergan reshaped its operations with a three-pronged strategy: making more money available for research and development, containing costs, and implementing quality. Between 1989 and 1991, Allergan reduced employment by ten percent, consolidated some manufacturing operations, reduced its debt, and improved its cash flow, resulting in the elevation of its price on the stock market. In addition, in 1991 the company's board of directors approved a plan to realign Allergan into market-focus business groups with a regional structure giving the company a global focus on the Americas, Europe, Pan-Asia, and Japan.
With a new focus on specialty pharmaceuticals, Allergan began to emerge as a developer of therapeutic products. In 1991 Allergan acquired Oculinum, Inc. and gained an advantage as the only firm marketing Type A botulinum toxin, a product of the bacterium that causes botulism that had been shown to be safe and effective in treating neuromuscular disorders. Botox, the market name for the substance manufactured by Oculinum, Inc., generated $5 million in sales during its first year. Also in 1991, Allergan researcher David Woodward patented a composition that could be used in treating glaucoma. At that time, most glaucoma treatments inhibited the formation of fluids. The new Allergan composition, a derivative of protoglandin (a fat molecule produced in the eye), helped the eye drain, relieving fluid pressure.
A product generating less excitement was Allergan's first one-bottle contact lens disinfecting solution, UltraCare Disinfectant/Neutralizer. Allergan was late to enter the one-step market, and its solution was considered inferior to its competitors by analysts, according to the New York Times. In 1992 Allergan sold its North and South American contact lens business, and in 1993 the company sold its remaining contact lens business.
In 1993 Allergan became involved in a proxy battle, as a result of new rules adopted that year by the Securities and Exchange Commission. The State of Wisconsin Investment Board in Madison rallied support from other institutions to put Allergan's "poison pill" shareholders' rights plan to a vote by the holders. Allergan's management position was that shareholder control of the plan would render the board impotent in case of a sudden takeover. Allergan's shareholders, however, passed what became one of the first successful shareholder solicitations by a slight majority (52 percent) at the April 1993 annual meeting.
The early 1990s restructuring improved Allergan's growth, with sales increasing from $762 million in 1991 to $858 million in 1993. Acquisitions marked the years 1994 and 1995. In 1994 Allergan acquired the Ioptex Research global intraocular lens product line. Among the 1995 acquisitions were Optical Micro Systems, Inc., a maker of cataract surgery equipment; Laboratorios Frumtost, S.A., a Brazilian manufacturer of ophthalmic and other pharmaceutical products; and the worldwide contact lens care product operations of Pilkington Barnes Hind. The last of these included the Concept F cleaning and disinfecting system and significantly increased the company's contact lens care product operations in Japan. In late 1995 Allergan launched Azelex cream for the topical treatment of mild to moderate acne of the skin; the product was well received by the market.
Near Merger with Pharmacia & Upjohn in 1996
Increasing competition and acquisition-related costs led to sagging profits for Allergan in the mid-1990s. In early 1996 Allergan entered advanced merger discussions with Pharmacia & Upjohn Inc., but the merger was blocked by AB Volvo, which held a minority stake in Pharmacia & Upjohn. Soon thereafter, Allergan announced a restructuring that included the elimination of about 450 jobs and 1996 pretax charges of about $75 million. The company enhanced its research and development efforts through collaborative agreements in 1996 with SUGEN, Inc., for research into treatments for ophthalmic diseases, such as age-related macular degeneration and diabetic retinopathy, and with Cambridge NeuroScience, Inc., for research into new treatments for glaucoma and other serious ophthalmic diseases. Also in 1996 Allergan received FDA approval for the Alphagan ophthalmic solution for the treatment of open-angle glaucoma and ocular hypertension. By the late 1990s Alphagan was the company's largest selling eye care pharmaceutical product.
In 1997 Allergan expanded its burgeoning skin care line through the FDA approval of Tazorac for the treatment of plaque psoriasis and acne. Also receiving FDA approval in 1997 was Array, a multifocal intraocular lens used to help cataract patients see well over a range of distances--a global market leader since its debut. Although overall sales had surpassed the $1 billion mark in 1995, growth stalled in 1997, with net sales falling slightly, from $1.15 billion in 1996 to $1.14 billion in 1997. With the company's financial performance and stock price continuing to disappoint a number of institutional investors, Shepherd retired at the end of 1997 after 31 years with Allergan. Taking over as president and CEO at the beginning of 1998 was David Pyott, who had been head of Novartis AG's nutrition division, which included the Gerber Products Co. baby food unit. Taking over as chairman was Herbert W. Boyer, a biochemist, member of the Allergan board since 1994, and a founder of Genentech Inc.
Under the new leadership, Allergan began a three-year restructuring effort in 1998 whereby five of its ten plants would be closed and its workforce reduced by 550 people, or nine percent. Allergan subsequently posted a net loss of $90.2 million for the year, due to a restructuring charge of $74.8 million and asset write-offs of $58.5 million. The company in 1998 also contributed $200 million to a new subsidiary, Allergan Specialty Therapeutics, Inc. (ASTI), which was then spun off to shareholders as a dividend. ASTI was charged with conducting research into new pharmaceutical products in the area of retinoids, which held promise for treating such diseases as diabetes and cancer. Allergan retained first crack at any products developed by the quasi-independent ASTI; it had the option to buy the spinoff back, and was likely to do so. Offloading some of its R&D enabled Allergan to increase R&D expenditures without having its earnings-per-share dragged down. Meanwhile, in 1998 the company also entered into a multiyear alliance with the Parke-Davis Pharmaceutical Research Division of Warner-Lambert Company to investigate retinoids for the treatment of metabolic diseases. Among other late 1990s R&D efforts were the attempt to expand the approved uses of Botox to include treatment of migraine headaches, chronic tension headaches, lower back pain, cerebral palsy, and such cosmetic uses as brow furrows; the development of Restasis, a drug for the treatment of moderate to severe dry eye; and the development of Abrevia, a treatment for allergic conjunctivitis.
In April 1999 a seemingly revitalized Allergan announced a $70 million expansion of its R&D campus at the Irvine headquarters and the addition of 300 new research scientists and other professionals. The expansion was slated for completion in 2004. Although the company had been hurt by stagnating sales of its contact lens care lines, which accounted for about 28 percent of overall sales in 1998, large increases in the sales of Botox and of eye care pharmaceuticals, most notably Alphagan, led to an 11 percent increase in overall sales in 1998 and a nearly 17 percent increase for the first six months of 1998. Allergan appeared to be well positioned to thrive in the increasingly competitive pharmaceutical industry.
Principal Subsidiaries: Allergan Australia (Pty.) Ltd.; Allergan France S.A.; Allergan Inc. (Canada); Allergan K.K. (Japan); Allergan Limited (U.K.); Allergan-Lok Produtos, Farmaceuticos, Ltda. (Brazil); Allergan Pharmaceuticals (Ireland) Ltd., Inc.; Allergan S.A. de C.V. (Mexico); Allergan S.A.E. (Spain); Allergan S.p.A. (Italy); Pharm-Allergan GmbH (Germany).
OVERALL
Beta: 0.93
Market Cap (Mil.): $24,282.99
Shares Outstanding (Mil.): 305.75
Annual Dividend: 0.20
Yield (%): 0.25
FINANCIALS
AGN Industry Sector
P/E (TTM): -- 48.64 38.20
EPS (TTM): -101.86 -- --
ROI: 0.07 0.48 1.91
ROE: 0.01 0.64 2.51
Statistics:
Public Company
Incorporated: 1948
Employees: 5,972
Sales: $1.26 billion (1998)
Stock Exchanges: New York
Ticker Symbol: AGN
NAIC: 339115 Ophthalmic Goods Manufacturing; 325412 Pharmaceutical Preparation Manufacturing; 339112 Surgical & Medical Instrument Manufacturing
Address:
2525 Dupont Drive
Irvine, California 92612
U.S.A.
Allergan, Inc. (Allergan), incorporated in 1977, is a multi-specialty health care company focused on developing and commercializing pharmaceuticals, biologics, medical devices and over-the-counter products. The Company discovers, develops and commercializes specialty pharmaceutical, biologics, medical device and over-the-counter products for the ophthalmic, neurological, medical aesthetics, medical dermatology, breast aesthetics, obesity intervention, urological and other specialty markets in more than 100 countries globally. Its business model includes products for which patients may be eligible for reimbursement and cash pay products that consumers pay for directly. It sells its products directly through its own sales subsidiaries in 36 countries and additionally through independent distributors in over 100 countries globally. On January 15, 2010, the Company completed the acquisition of Serica Technologies, Inc. In March 2010, it reacquired the rights from GlaxoSmithKline (GSK) to develop and sell Botox in Japan and the People’s Republic of China. On July 1, 2010, it completed a business combination agreement and effected a revised distribution agreement with its distributor in Turkey. In September 2010, it acquired from Vistakon Pharmaceuticals, LLC, Janssen Pharmaceutica N.V., Beerse and Johnson & Johnson Vision Care Inc. the global license to manufacture and commercialize alcaftadine 0.25%, a topical allergy medication for the prevention and treatment of itching associated with allergic conjunctivitis.
The Company operates in two segments: specialty pharmaceuticals and medical devices. The specialty pharmaceuticals segment produces a range of pharmaceutical products, including ophthalmic products for dry eye, glaucoma, retinal diseases and ocular surface disease; Botox for certain therapeutic and aesthetic indications; skin care products for acne, psoriasis, eyelash growth and other prescription and over-the-counter skin care products, and urologics products. The medical devices segment produces a range of medical devices, including breast implants for augmentation, revision and reconstructive surgery; obesity intervention products, including the Lap-Band System and the Orbera Intragastric Balloon System, and facial aesthetics products. Its products are sold to drug wholesalers, independent and chain drug stores, pharmacies, commercial optical chains, opticians, mass merchandisers, food stores, hospitals, group purchasing organizations, integrated direct hospital networks, ambulatory surgery centers and medical practitioners, including ophthalmologists, neurologists, physiatrists, dermatologists, plastic and reconstructive surgeons, aesthetic specialty physicians, bariatric surgeons, pediatricians, urologists and general practitioners.
Specialty Pharmaceuticals Segment
The Company develops, manufactures and markets a range of prescription and non-prescription products designed to treat diseases and disorders of the eye, including chronic dry eye, glaucoma, inflammation, infection, allergy and retinal disease. The Company’s Restasis (cyclosporine ophthalmic emulsion) 0.05% is a prescription therapy for the treatment of chronic dry eye globally. During the year ended December 31, 2010, Health Canada approved Restasis for the treatment of aqueous deficient dry eye disease. As of December 31, 2010, Restasis was approved in 41 countries. Its over-the-counter artificial tears products include the Refresh and Refresh Optive brands, treat dry eye symptoms including irritation and dryness due to pollution, computer use, aging and other causes. The segment of the market for ophthalmic prescription drugs is for the treatment of glaucoma, a sight-threatening disease typically characterized by elevated intraocular pressure leading to optic nerve damage. Lumigan 0.03% and Lumigan 0.01% are topical treatments indicated for the reduction of elevated intraocular pressure in patients with glaucoma or ocular hypertension. As of December 31, 2010, it sold Lumigan 0.01% and Lumigan 0.03% in the United States and over 75 countries globally. During 2010, the Food & Drug Administration (FDA) approved Lumigan 0.01% as a therapy indicated for the reduction of elevated intraocular pressure in patients with open-angle glaucoma or ocular hypertension. During 2010, combined sales of Lumigan 0.03%, Lumigan 0.01% and Ganfort represented approximately 11% of its total consolidated product net sales.
The Company’s ophthalmic solutions are Alphagan, Alphagan P 0.15% and Alphagan P 0.1%. These products lower intraocular pressure by reducing aqueous humor production and increasing uveoscleral outflow. Alphagan P 0.15% and Alphagan P 0.1% are improved reformulations of Alphagan containing brimonidine, the active ingredient in Alphagan, preserved with Purite. As of December 31, 2010, it marketed Alphagan, Alphagan P 0.15% and Alphagan P 0.1% in over 70 countries globally. A generic form of Alphagan is sold in a range of other countries, including Canada, Mexico, India, Brazil, Colombia, Argentina and in the European Union. The Company is developing the ophthalmic solution Combigan, a brimonidine and timolol combination for the treatment of glaucoma and ocular hypertension in patients. As of December 31, 2010, Combigan is sold in 67 countries globally. During 2010,combined sales of Alphagan, Alphagan P 0.15% and Alphagan P 0.1% and Combigan represented approximately 8%of its total consolidated product net sales. Its ophthalmic anti-inflammatory product Acuvail (ketorolac tromethamine ophthalmic solution) 0.45% is an advanced unit-dose preservative-free formulation of ketorolac for the treatment of pain and inflammation following cataract surgery. Its ophthalmic anti-inflammatory product Acular LS (ketorolac ophthalmic solution) 0.4% is a version of Acular that has been reformulated for the reduction of ocular pain, burning and stinging following corneal refractive surgery. Its ophthalmic anti-inflammatory product Pred Forte is a topical steroid.
The Company’s anti-infective is Zymar (gatifloxacin ophthalmic solution) 0.3%, which it licenses from Kyorin Pharmaceutical Co., Ltd. and has global ophthalmic commercial rights, excluding Japan, Korea, Taiwan and other countries in Asia and Europe. During 2010, it received FDA approval of Zymaxid (gatifloxacin ophthalmic solution) 0.5%, its anti-infective product indicated for the treatment of bacterial conjunctivitis. In February 2011, it discontinued Zymar. The Company licenses Elestat from Boehringer Ingelheim AG, and holds global ophthalmic commercial rights, excluding Japan. Elestat is used for the prevention of itching associated with allergic conjunctivitis. During 2010, Elestat (together with sales under its brand names Relestat and Purivist) is approved in 49 countries. Alcaftadine is FDA-approved in the United States under the brand name Lastacaft (alcaftadine ophthalmic solution) and was commercialized in January 2011. Ozurdex is a bioerodable formulation of dexamethasone in the Company’s Novadur sustained-release drug delivery system that can be used to locally and directly administer medications to the retina. During 2010, the European Medicines Agency granted marketing authorization for Ozurdex in the 27 member states of the European Union. During 2010, the FDA approved Ozurdex for the treatment of non-infectious ocular inflammation, or uveitis, affecting the posterior segment of the eye.
The Company’s neuromodulator product, Botox (onabotulinumtoxinA) treats a range of therapeutic conditions, as well as for aesthetic. Marketed as Botox, Botox Cosmetic, Vistabel, Vistabex and Botox Vista depends on the indication and country of approval. During 2010, its product was approved in approximately 80 countries for up to 21 indications. During 2010, sales of Botox represented approximately 29% of its total consolidated product. Botox has been used therapeutically for the treatment of certain neuromuscular disorders. During 2010, the FDA approved Botox for the prophylactic treatment of headaches in adults with chronic migraine. In many countries outside of the United States, Botox is approved for treating hemifacial spasm, spasticity associated with pediatric cerebral palsy and upper limb spasticity in post-stroke patients. As of December 31, 2010, it was in development for Botox in the United States and Europe for new indications, including lower limb spasticity, neurogenic overactive bladder, idiopathic overactive bladder and benign prostatic hyperplasia. During 2010, the Company received approval for Botox for the prophylactic treatment of headaches in adults with chronic migraine in the United Kingdom. During 2010, it completed enrollment in its phase- III clinical trials for the use of Botox to treat idiopathic overactive bladder. As of December 31, 2010, more than 60 countries had approved facial aesthetic indications for Botox, Botox Cosmetic, Vistabel, Vistabex or Botox Vista. In Australia, New Zealand, Canada and certain countries in East Asia and Latin America, it has regulatory approvals for upper facial lines, including crow’s feet. It sponsors aesthetic specialty physician training in approved countries. During 2010, it received approval of Botox in Japan for the treatment of upper and lower limb spasticity.
The Company’s skin care product lines focus on the acne, psoriasis, physician-dispensed skin care and eyelash growth markets, particularly in the United States and Canada. Aczone (dapsone) gel 5% is approved for sale in both the United States and Canada and is indicated for the treatment of acne vulgaris in patients age 12 and older. Aczone contains chemical entity (dapsone) for acne treatment since Tazorac (tazarotene) gel. In February 2011, it outlicensed its Canadian rights to Aczone to Biovail Laboratories International SRL, a subsidiary of Valeant Pharmaceuticals, Inc. The Company sells Tazorac (tazarotene) gel in the United States for the treatment of acne and plaque psoriasis. It also markets a cream formulation of Tazorac in the United States for the topical treatment of acne and for the treatment of psoriasis. Avage (tazarotene) cream is indicated for the treatment of facial fine wrinkling, mottled hypo- and hyperpigmentation, or blotchy skin discoloration, and benign facial lentigines, or flat patches of skin discoloration, in patients using a comprehensive skin care and sunlight avoidance program. It develops and markets glycolic acid-based skin care products. It markets its M.D. Forte line of alpha hydroxy acid products to physicians in the United States. Prevage MD is a clinically tested antioxidant designed to reduce the appearance of fine lines and wrinkles, as well as provide protection against environmental factors, including sun damage, air pollution and cigarette smoke. It markets Prevage MD to physicians in the United States. Vivite is an anti-aging skin care line that uses GLX Technology, creating a blend of glycolic acid and natural antioxidants. It markets its Vivite line of skin care products to physicians in the United States. Latisse (bimatoprost ophthalmic solution) 0.03%, is FDA-approved prescription treatment of insufficient or inadequate eyelashes. Latisse is a once-daily prescription treatment applied to the base of the upper eyelashes with a sterile, single-use-per-eye disposable applicator. The Company’s Sanctura XR is a once-daily anticholinergic for the treatment of over-active bladder (OAB). During 2010, Health Canada approved Sanctura XR. It promotes Sanctura XR to the urology specialty channel.
The Company competes with Alcon Laboratories, Inc./Novartis AG, Bausch & Lomb Inc., Genentech/Hoffman La Roche AG, Inspire, Ista Pharmaceuticals, Inc., Merck & Co., Inc., Pfizer Inc., Santen Seiyaku, Sandoz, Inc., PharmaForce, Inc., Apotex Inc., Hi-Tech Pharmacal Co., Barr Laboratories, Inc., Elan Pharmaceuticals, Solstice Neurosciences Inc., Ipsen Ltd., Medicis Pharmaceutical Corporation, Nestle, L’Oreal Group, Galderma, Q-Med A.B., Merz Pharmaceuticals, Bioform Medical Inc., Anteis S.A., Johnson & Johnson, Medy-Tox Inc., Sanofi-Aventis, Galderma, Medicis, GSK, Merck & Co., Inc., Obagi Medical Products, Inc., SkinMedica, Inc., Valeant Pharmaceuticals International, Watson Pharmaceuticals, Inc., Warner Chilcott PLC and Astellas Pharma US, Inc.
Medical Devices Segment
The Company’s silicone gel and saline breast implants, consist of a range of shapes, sizes and textures, has been available to women in more than 60 countries for breast augmentation, revision and reconstructive surgery. Its breast implants consist of a silicone elastomer shell filled with either a saline solution or silicone gel with a range of cohesivity. It markets its breast implants under the trade names Natrelle, Inspira, and CUI and BioCell, MicroCell and BioDimensional. It sells saline breast implants in the United States and globally for use in breast augmentation, revision and reconstructive surgery. Its Breast Implant Follow-Up Study (BIFS) provide data on a number of endpoints including long-term local complications, connective tissue disease issues, neurological disease issues, offspring issues, reproductive issues, lactation issues, cancer, suicide, mammography issues and to study magnetic resonance imaging compliance and rupture results. The Company sells a range of tissue expanders for breast reconstruction and also as an alternative to skin grafting to cover burn scars and correct birth defects. It develops, manufactures and markets dermal filler products designed to improve facial appearance by smoothing wrinkles and folds. Its facial aesthetics product is the Juvederm dermal filler family of products. Its Juvederm dermal filler family of products, including Juvederm, Voluma and Surgiderm are developed using its Hylacross technology. In Europe, it markets various formulations of Juvederm, Voluma and Surgiderm for wrinkle and fold augmentation. The Juvederm dermal filler family of products are approved or registered in over 34 countries. During 2010, it launched Juvederm Ultra XC and Ultra Plus XC, each formulated with lidocaine.
The Company develops, manufactures and markets medical devices for the treatment of obesity. Its principal product in this area, the Lap-Band System, is designed to provide minimally invasive long-term treatment obesity and is used as an alternative to more invasive procedures such as gastric bypass surgery, sleeve gastrectomy, stapling or gastric imbrications. The Lap-Band System is an adjustable silicone band that is laparoscopically placed around the upper part of the stomach through a small incision, creating a small pouch at the top of the stomach. The Lap-Band AP System has 360-degree Omniform technology, which is designed to distribute pressure throughout the band’s adjustment range. The Lap-Band AP System comes in two sizes, standard and large. In February 2011, the FDA approved the use of the Lap-Band System for weight reduction in obese adults. The Company sells the Orbera Intragastric Balloon System, which is a non-surgical alternative for the treatment of overweight and obese adults. The Orbera System includes a silicone elastomer balloon that is filled with saline after transoral insertion into the patient’s stomach to reduce stomach capacity and create an earlier sensation of fullness. The Orbera System is removed endoscopically within six months of placement. Its FloWatch technology powers the EasyBand Remote Adjustable Gastric Band System or EasyBand, a telemetrically-adjustable gastric banding device for the treatment of morbid obesity. The EasyBand, like the Lap-Band System, is implanted laparoscopically through a small incision.
The Company competes with Mentor, Silimed, Arion, BioSil Ltd, Cereplas, Eurosilicone, Nagor, Poly Implant Prostheses, Polytech, Johnson & Johnson, Helioscopie SA, Silimed and Spatz FGIA, Inc., Medicis, Merz, BioForm, Sanofi-Aventis, Q-Med, Teoxane and Anteis.
Allergan again became a public company in 1989, when SmithKline merged with Beecham Corporation, spinning off distribution of Allergan to shareholders. The transition period posed problems for Allergan, which had high costs, inefficient manufacturing systems, gaps in new product development, and large debt. The eye care market was no longer growing at the dramatic pace of the 1980s. Sales had moved away from traditional contact lenses, as disposable lenses and fashion glasses--neither of which were sold by Allergan&mdashøok the industry lead. With ophthalmologists spending less, Allergan's diagnostic equipment business also was experiencing little profit.
Allergan's business strategy had become unmanageable because it forced the company to compete over too broad a range of business sectors: from pharmaceuticals to consumer products to diagnostic eye care instruments. In 1990 Allergan was close to a billion-dollar company, but its stock had fallen from $25 a share (at the time of its spinoff) to $15 a share. Investment analysts began to advise investors that Allergan was prime for a takeover, pointing to Nestlé's Alcon Laboratories as a potential purchaser.
Allergan changed its business strategy to reflect market needs in the early 1990s. Under the leadership of president and CEO William Shepherd, Allergan reshaped its operations with a three-pronged strategy: making more money available for research and development, containing costs, and implementing quality. Between 1989 and 1991, Allergan reduced employment by ten percent, consolidated some manufacturing operations, reduced its debt, and improved its cash flow, resulting in the elevation of its price on the stock market. In addition, in 1991 the company's board of directors approved a plan to realign Allergan into market-focus business groups with a regional structure giving the company a global focus on the Americas, Europe, Pan-Asia, and Japan.
With a new focus on specialty pharmaceuticals, Allergan began to emerge as a developer of therapeutic products. In 1991 Allergan acquired Oculinum, Inc. and gained an advantage as the only firm marketing Type A botulinum toxin, a product of the bacterium that causes botulism that had been shown to be safe and effective in treating neuromuscular disorders. Botox, the market name for the substance manufactured by Oculinum, Inc., generated $5 million in sales during its first year. Also in 1991, Allergan researcher David Woodward patented a composition that could be used in treating glaucoma. At that time, most glaucoma treatments inhibited the formation of fluids. The new Allergan composition, a derivative of protoglandin (a fat molecule produced in the eye), helped the eye drain, relieving fluid pressure.
A product generating less excitement was Allergan's first one-bottle contact lens disinfecting solution, UltraCare Disinfectant/Neutralizer. Allergan was late to enter the one-step market, and its solution was considered inferior to its competitors by analysts, according to the New York Times. In 1992 Allergan sold its North and South American contact lens business, and in 1993 the company sold its remaining contact lens business.
In 1993 Allergan became involved in a proxy battle, as a result of new rules adopted that year by the Securities and Exchange Commission. The State of Wisconsin Investment Board in Madison rallied support from other institutions to put Allergan's "poison pill" shareholders' rights plan to a vote by the holders. Allergan's management position was that shareholder control of the plan would render the board impotent in case of a sudden takeover. Allergan's shareholders, however, passed what became one of the first successful shareholder solicitations by a slight majority (52 percent) at the April 1993 annual meeting.
The early 1990s restructuring improved Allergan's growth, with sales increasing from $762 million in 1991 to $858 million in 1993. Acquisitions marked the years 1994 and 1995. In 1994 Allergan acquired the Ioptex Research global intraocular lens product line. Among the 1995 acquisitions were Optical Micro Systems, Inc., a maker of cataract surgery equipment; Laboratorios Frumtost, S.A., a Brazilian manufacturer of ophthalmic and other pharmaceutical products; and the worldwide contact lens care product operations of Pilkington Barnes Hind. The last of these included the Concept F cleaning and disinfecting system and significantly increased the company's contact lens care product operations in Japan. In late 1995 Allergan launched Azelex cream for the topical treatment of mild to moderate acne of the skin; the product was well received by the market.
Near Merger with Pharmacia & Upjohn in 1996
Increasing competition and acquisition-related costs led to sagging profits for Allergan in the mid-1990s. In early 1996 Allergan entered advanced merger discussions with Pharmacia & Upjohn Inc., but the merger was blocked by AB Volvo, which held a minority stake in Pharmacia & Upjohn. Soon thereafter, Allergan announced a restructuring that included the elimination of about 450 jobs and 1996 pretax charges of about $75 million. The company enhanced its research and development efforts through collaborative agreements in 1996 with SUGEN, Inc., for research into treatments for ophthalmic diseases, such as age-related macular degeneration and diabetic retinopathy, and with Cambridge NeuroScience, Inc., for research into new treatments for glaucoma and other serious ophthalmic diseases. Also in 1996 Allergan received FDA approval for the Alphagan ophthalmic solution for the treatment of open-angle glaucoma and ocular hypertension. By the late 1990s Alphagan was the company's largest selling eye care pharmaceutical product.
In 1997 Allergan expanded its burgeoning skin care line through the FDA approval of Tazorac for the treatment of plaque psoriasis and acne. Also receiving FDA approval in 1997 was Array, a multifocal intraocular lens used to help cataract patients see well over a range of distances--a global market leader since its debut. Although overall sales had surpassed the $1 billion mark in 1995, growth stalled in 1997, with net sales falling slightly, from $1.15 billion in 1996 to $1.14 billion in 1997. With the company's financial performance and stock price continuing to disappoint a number of institutional investors, Shepherd retired at the end of 1997 after 31 years with Allergan. Taking over as president and CEO at the beginning of 1998 was David Pyott, who had been head of Novartis AG's nutrition division, which included the Gerber Products Co. baby food unit. Taking over as chairman was Herbert W. Boyer, a biochemist, member of the Allergan board since 1994, and a founder of Genentech Inc.
Under the new leadership, Allergan began a three-year restructuring effort in 1998 whereby five of its ten plants would be closed and its workforce reduced by 550 people, or nine percent. Allergan subsequently posted a net loss of $90.2 million for the year, due to a restructuring charge of $74.8 million and asset write-offs of $58.5 million. The company in 1998 also contributed $200 million to a new subsidiary, Allergan Specialty Therapeutics, Inc. (ASTI), which was then spun off to shareholders as a dividend. ASTI was charged with conducting research into new pharmaceutical products in the area of retinoids, which held promise for treating such diseases as diabetes and cancer. Allergan retained first crack at any products developed by the quasi-independent ASTI; it had the option to buy the spinoff back, and was likely to do so. Offloading some of its R&D enabled Allergan to increase R&D expenditures without having its earnings-per-share dragged down. Meanwhile, in 1998 the company also entered into a multiyear alliance with the Parke-Davis Pharmaceutical Research Division of Warner-Lambert Company to investigate retinoids for the treatment of metabolic diseases. Among other late 1990s R&D efforts were the attempt to expand the approved uses of Botox to include treatment of migraine headaches, chronic tension headaches, lower back pain, cerebral palsy, and such cosmetic uses as brow furrows; the development of Restasis, a drug for the treatment of moderate to severe dry eye; and the development of Abrevia, a treatment for allergic conjunctivitis.
In April 1999 a seemingly revitalized Allergan announced a $70 million expansion of its R&D campus at the Irvine headquarters and the addition of 300 new research scientists and other professionals. The expansion was slated for completion in 2004. Although the company had been hurt by stagnating sales of its contact lens care lines, which accounted for about 28 percent of overall sales in 1998, large increases in the sales of Botox and of eye care pharmaceuticals, most notably Alphagan, led to an 11 percent increase in overall sales in 1998 and a nearly 17 percent increase for the first six months of 1998. Allergan appeared to be well positioned to thrive in the increasingly competitive pharmaceutical industry.
Principal Subsidiaries: Allergan Australia (Pty.) Ltd.; Allergan France S.A.; Allergan Inc. (Canada); Allergan K.K. (Japan); Allergan Limited (U.K.); Allergan-Lok Produtos, Farmaceuticos, Ltda. (Brazil); Allergan Pharmaceuticals (Ireland) Ltd., Inc.; Allergan S.A. de C.V. (Mexico); Allergan S.A.E. (Spain); Allergan S.p.A. (Italy); Pharm-Allergan GmbH (Germany).
OVERALL
Beta: 0.93
Market Cap (Mil.): $24,282.99
Shares Outstanding (Mil.): 305.75
Annual Dividend: 0.20
Yield (%): 0.25
FINANCIALS
AGN Industry Sector
P/E (TTM): -- 48.64 38.20
EPS (TTM): -101.86 -- --
ROI: 0.07 0.48 1.91
ROE: 0.01 0.64 2.51
Statistics:
Public Company
Incorporated: 1948
Employees: 5,972
Sales: $1.26 billion (1998)
Stock Exchanges: New York
Ticker Symbol: AGN
NAIC: 339115 Ophthalmic Goods Manufacturing; 325412 Pharmaceutical Preparation Manufacturing; 339112 Surgical & Medical Instrument Manufacturing
Address:
2525 Dupont Drive
Irvine, California 92612
U.S.A.