A Step Ahead of Medicine: Allergan, Plc
Large Cap Pharmaceuticals: Eye Care, CNS, Aesthetics, Women’s Health
Current Drug Outlook: A
Pipeline Diversity: A
Pipeline Risk: A
Pipeline Competition: B
Financial Security: B
Pros: Allergan has extremely diverse drugs and pipelines in many different fields of medicine. In addition, Allergan has strengthening financial security, an extremely favorable valuation and has large growth potential in almost all of its primary fields.
Allergan is positioned in all the right fields in healthcare and medicine. It has majority of its income coming from the fields of eye care*, central nervous system, aesthetics*, gastroenterology, and women's health*. All of its main segments have grown remarkably YOY and will continue to do so. Women’s health is its fastest growing sector with a 19% growth rate and with increased awareness to women's health, the growth will not slow down. Allergan recently sold its generics unit to Teva Pharmaceuticals for $40.5B. This cash was used to buy $15B of its own stock, $10B to repay its own debt and the remaining $15B was used to acquire companies in the forefront of medicine such as LifeCell. LifeCells purchase adds to Allergan’s future pipeline in regeneration and reconstructive tissue therapy; one of the hottest sectors of medicine. Additionally, Allergan is sitting on $13.2B in cash to further advance its pipeline.
*Explained further below
Cons: Allergan currently has $52.7B in liability of which $32.8B in debt. While Allergan is expected to reduce it by $6.5B in the next 18 mo., this load still represents a heavy percent of the company itself and its interest expense is above $1B each year. Allergan’s Namenda XR, which used to treat dementia symptoms associated with Alzheimers currently generating revenue of $627.6M and its treatment for ulcerative colitis, Asacol/Dezicol, have also been facing tremendous generic competition, hurting Allergan's future top line.