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Allergan posts 3% Q1 revenue increase

Allergan has achieved US$3.67 billion (AU$4.89 b) in net revenues for the first quarter, a 2.8% increase compared to the same period last year.

In an update to shareholders, chairman and CEO Mr Brent Saunders said the company was “off to a strong start” thanks to what he described as solid execution on all fronts, including the research and development (R&D) pipeline.

“Allergan revenues grew 3% driven by a 13% increase in our core business amid exclusivity challenges for older products, and our tight expense management enabled maintenance of strong margins. We drove strong cash flow, continued to pay down debt to further de-lever our balance sheet while accelerating and completing our US$2 billion (AU$2.66 b) share repurchase program,” Saunders said.

"Allergan revenues grew 3% driven by a 13% increase in our core business amid exclusivity challenges for older products,"
Brent Saunders, Chairman and CEO of Allergan

The company reported its GAAP operating loss from continuing operations had reduced to US$654 million (AU$870.74 m) for the quarter, a near 28% improvement on the same quarter last year. Non-GAAP adjusted operating income from continuing operations in the first quarter was US$1.76 billion (AU$2.34 b), an increase of 8.7% compared with the prior year quarter.

The promising start to the year saw the company raised its 2018 net revenue projections to between US$15.15–15.35 billion (AU$20.17–20.44 b).

However, while net revenues increased overall, sales of the company’s blockbuster dry eye drug, Restasis, fell by 17.2% to US$255.8 million (AU$340.57 m). The company said even though demand for the drug grew by 4%, it was offset by trade buying patterns and lower net selling prices.

Restasis is one of a number of Allergan’s drugs that are likely to be challenged by generic competitors in the coming years, and the company’s stock price has dropped by more than a third over the past year.

According to Reuters, Allergan executives told a conference call of securities analysts that the company was deep into the process of a strategic review, after Saunders said in March that the company needed to look at all options “with a sense of urgency.”

During the call, Saunders appeared to rule out fundamental changes but said said management was considering a number of options, including deploying capital to buy back shares, performing divestitures, splitting the company, making acquisitions, or continuing to operate Allergan as is.

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“Running the company in large part as it exists today is not only an option, but also the baseline against which all options need to be considered,” Saunders said.

“We’re not going to execute an activity that doesn’t recognise the full inherent value of our assets at Allergan.”

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