Allergan Plans Cost Cuts, Takes Impairment Charge as Restasis Generics Loom

November 3, 2017: By Joan McKenna

Allergan-logo

Allergan told analysts Nov. 1 that it is taking several steps to prepare for loss of patent exclusivity for Restasis in 2018, even as net sales of its dry eye treatment increased 2.9 percent in Q3-2017 year over year.

Allergan CEO Brent Saunders said the move followed a recent US district court decision that invalidated four of Restasis’ patents. The company has appealed the decision.

Dublin-based Allergan has taken impairment charges of $3.2 billion related to Restasis and $164.0 million related to other dry eye assets obtained in its acquisition of legacy Allergan.

In addition, the company is making plans to reduce costs, while protecting long-term growth drivers, as it prepares for possible scenarios, including a Restasis generic launching Jan. 1, 2018, or one launching in mid-2018. The FDA currently has not approved a generic version.

Saunders said those cost reductions will be implemented rapidly as soon as officials complete their planning. Still, the company intends to increase its dividend and pay down nearly $4 billion in debt in Q1-2018.

Allergan’s net revenues in Q3-2017 totaled $4.03 billion, an 11 percent increase over the same quarter in 2016.

Officials noted that the company is committed to eye care, which is a $2 billion annual business without Restasis.

Other ophthalmic products that performed well in the third quarter included Ozurdex, an implant for diabetic macular edema and other retinal conditions. Net revenues increased 17.7 percent in the US to $24.6 million and 12 percent outside the US to $50.2 million, due to increasing demand.

Restasis’ net revenues in the third quarter totaled $366.8 million. Full-year revenues are expected to total about $1.4 billion.

Asked about competition from compounding pharmacies, Saunders said Allergan would watch the situation closely, ensuring that compounders are not allowed to find an alternative path to launching drugs without the full oversight and review that the FDA has for medicines.

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