Caroline Chen New York
IN FIVE years, Actavis has reshaped itself from just another generics drugmaker to one of the top 10 pharmaceutical companies by market value, capping off a blistering pace of dealmaking with the $66 billion (R732bn) agreement to purchase Allergan.
Now it’s forecasting earnings per share of $25 in 2017, or 84 percent more than analysts’ estimates for this year. The plan is to cut $1.8bn in annual costs and use its sales force, focused on primary-care doctors, to generate more revenue from Allergan drugs like Botox, which have been traditionally marketed to specialists.
The acquisition, announced on Monday, would make Actavis a $100bn company, up from less than $5bn at the end of 2009. Allergan’s drugs give Actavis access to the ophthalmology market and further reach in dermatology, helping broaden the array of products it can promote to doctors.
“It’s going to be the best deal I’ve ever done in my career,” chief executive Brent Saunders said. “It’s about driving growth on the top line and leveraging growth on the bottom line.”
To strike the deal, Actavis had to beat out a hostile bid from Valeant Pharmaceuticals International, backed by activist investor Bill Ackman. Valeant said on Monday that it couldn’t justify a price as high as Actavis proposed.
The transaction took place against a backdrop of one of the busiest merger-and-acquisition environments in the history of the industry. Companies are jockeying for the choicest assets to fill out their collections of top-selling drugs, while seeking savings on overhead and taxes.
With Allergan, Actavis’s brand-name products in North America will make up 52 percent of revenue, according to filings, compared with 13 percent in 2013. – Bloomberg