Allergan cuts workforce as part of restructure
Allergan has announced that about 13 per cent of its workforce will go as part of a restructure in the second half of 2014.
About 1,500 employees – a higher number than analysts had expected – will go in a bid to make annual pre-tax savings of approximately $475 million in 2015.
Spending cuts will also be instituted across the commercial organisation, general and administrative functions, manufacturing and R&D.
The restructure is set against the backdrop of a series of hostile takeover bids by Valeant, which have been rejected by Allergan as greatly undervaluing the company.
The implication is that Allergan is pruning to ensure it is of better value to shareholders as a standalone company.
Allergan says it remains committed to an innovation-focused research and development pipeline to deliver sustained long-term growth. Hence, approximately 94 per cent of all customer-facing personnel are unaffected by the restructuring. All pharmaceutical R&D programmes in the clinic will continue, and any reductions in discovery programmes will not impact approvals within the strategic plan period (2014-2019).
Allergan is looking for double digit sales growth over the next six years and expects to deliver a compounded annual growth rate of greater than 20 per cent EPS growth in that period.
Total pre-tax charges of between $375 million and $425 million are expected in connection with the restructuring and other costs between Q3 2014 and Q2 2015.
“With continuing strong momentum, Allergan recorded the strongest increase in absolute dollar sales in any quarter in our history, and again delivered sales and earnings per share growth above the high end of our expectations,” said CEO David Pyott. “Furthermore, we are pleased with the progression of key clinical programmes into phase III as well as the recent FDA approval of OZURDEX for diabetic macular oedema.”
For the full year 2014, Allergan expects product net sales of between $6,900 million and $7,050 million, excluding revenue related to the sale of its obesity intervention business.
The company focuses on eye care, neurosciences, medical aesthetics, medical dermatology, breast aesthetics and urologics and is the maker of Botox.
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