Allergan hopes to stave off Valeant with Q2 growth, cost-cutting
- Allergan is cutting 1500 positions worldwide, representing 13% of the company’s global workforce.
- The goal is to increase stock value by reducing costs. Anticipated cost-savings for 2015 are $475 million.
- Allergan also announced second-quarter results along with the restructuring announcement. Q2 product sales increased 15.9% to $1.8 billion, year over year.
In the midst of fending off a hostile takeover, Allergan announced a restructuring plan, along with solid second-quarter earnings of $417.2 million, compared with $359.9 million in Q2 2013. Botox sales alone rose 12.9% to $579.4 million.
The new earnings report gives Allergan, which is attempting to keep its commitment to achieving double-digit growth through 2019, some much-needed good news. For 2014, overall, Allergan is expecting up to $7.1 billion in revenues. In addition, its cost-cutting moves are one way for the company to continue to strengthen its position against a hostile takeover bid by Valeant.
But Allergan should not expect Valeant to back down from its bid. In fact, Valeant spokespeople cited the new cuts as proof that "Allergan's management has a poor record of managing costs." Valeant's latest offer for Allergan stands at about $53 billion.
- First Word Pharma Allergan to cut 1500 jobs; posts Q2 rise in sales, profit