Allergan Considers Breaking Up Into Two Businesses Months After Actavis Merger

This article was originally published here
July 27, 2015
By Alex Keown, BioSpace.com Breaking News Staff

DUBLIN — Just months after completing Allergan Inc. (AGN) and Actavis Plc (ACT) merger to form Allergan Plc, the company is considering breaking up into two businesses as part of a corporate realignment before the ink on the deal completely dries, Reuters reported this morning.

The possible corporate realignment would likely keep branded products in one company and spin the generic drugs off into a separate entity, Reuters said. The information was provided to Reuters via an anonymous “person familiar with the matter.” An Allergan Plc spokesperson declined to comment on the rumors, the New York Times reported this morning.

News of the possible realignment comes only a few weeks after Allergan Plc backed up its dry eye treatment Restasis by adding another dry eye care treatment to its portfolio with the $125 million-plus acquisition of U.S.-based Oculeve, a development-stage medical device company for $125 million in upfront cash payments and undisclosed milestone payments. Oculeve’s lead drug is OD-01, a non-invasive nasal neurostimulation device that increases tear production.

It is unclear at this point if this is mere speculation, or if Allergan Plc is being courted by a potential buyer. Following the formation of Allergan Plc, the company said it initiated a global rebranding campaign to guide the transition of its facilities across the world to reflect the new name. The company redesigned its corporate logo and launched a new website at www.Allergan.com.

Allergan’s stock shot up more than 20 points to $328.40 in aftermarket trading on Friday.

While the Allergan Plc brand was still in the process of being defined after the merger with Actavis, spinning off a generics business is not unprecedented. In 2014 Abbott Laboratories sold its generic business to Mylan Inc. for $5.3 billion.

In the past year, there have been multiple acquisition deals totaling more than $180 billion, Bloomberg said. The pace is set to beat last year’s M&A record of about $200 billion. Some of the noted M&A deals include The merger between Allergan and Actavis was competed in March and the newly formed company formally changed its name to Allergan Plc in June. When it was formed, Allergan Plc retained the Actavis name for select geographic regions and products, including the United States and Canada. Generic drugs manufactured by the company will still be sold under the Actavis name to capitalize on brand recognition. The decision to keep the Actavis name in North America followed customer response, the company said.

In November 2014 Actavis acquired Allergan for $66 billion in a combination of cash and stock. Under the terms, Actavis would pay a total of $219 a share with nearly 60 percent of the deal in cash and the rest in stock, Actavis said. Allergan had also been courted by Valeant Pharmaceuticals International, Inc. (VRX) in a deal that reportedly went as high as $60 billion.

Allergan is the maker of Botox and other anti-wrinkle drugs, as well as its manufacturing of implants for breast augmentation. Sales of Botox were about $2 billion last year, one third of Allergan’s annual revenues and an increase of about 10 percent over sales in 2013.

Actavis reported strong sales growth in 2014 and announced U.S. Food and Drug Administration (FDA) approval of Namzaric, a fixed-dose combination (FDC) of memantine hydrochloride extended-release and donepezil hydrochloride for the treatment of moderate to severe dementia of the Alzheimer’s. Additionally Actavis reported a positive recommendation by an FDA advisory committee for the anti-infective AVYCAZ. Actavis also filed a new drug application for the antipsychotic Cariprazine.

Through strategic and bold mergers and acquisitions, Actavis built itself into a powerhouse pharmaceutical company worth approximately $166 billion.

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