Inside Allergan’s 1Q17 Results: Revenue Streams
Allergan’s 1Q17 revenues
Allergan (AGN) released its 1Q17 earnings on May 9, 2017, reporting a growth of 5.1% and revenues of ~$3.6 billion, as compared to $3.4 billion in 1Q16. This growth was driven by the strong performance of its key brands, new products, and the inclusion of revenues from LifeCell products, while the loss of exclusivity for Asacol HD and its Namenda franchise and divestitures impacted growth during 1Q17.
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As the graph shows, the major portion of revenues for Allergan come from sales in US markets. The company has reclassified its operations into three business segments, including the US General medicine, US Specialized Therapeutics, and International Business. Notably, the company completed the divestiture of its global generics business and its Anda distribution business to Teva Pharmaceuticals (TEVA) in 2016.
Revenue performance: US Specialized Therapeutics segment
The US Specialized Therapeutics segment includes the company’s eye care, medical aesthetics, medical dermatology, and neuroscience and urology franchises. Revenues from the segment rose 14.1% to $1.48 billion in 1Q17, as compared to $1.30 billion in 1Q16.
This growth was driven by the strong performance of Kybella and the strong uptake of eye care products like Ozurdex and Restasis, dermatology products, and the acquisition of LifeCell.
The US General Medicine segment
The US General Medicine segment includes the company’s central nervous system, gastroenterology, women’s health, anti-infectives, and established brands franchises. Revenues from this segment fell 7.4% to $1.35 billion during 1Q17, as compared to $1.45 billion in 1Q16. This decline in revenues was due to lower sales in the Namenda franchise.
The International segment
Revenues from the International segment rose 9.5% to $737 million for 1Q17, as compared to $673 million for 1Q16. The segment reported operational growth of 10.5%, offset by a 1% negative impact of foreign exchange. This growth was driven by an increase in sales in Europe and Asia-Pacific, mainly due to the strong growth in sales of Botox, fillers, and eye care.
To divest risk, investors can consider ETFs like the VanEck Vectors Biotech ETF (BBH), which has 9.0% of its total assets in Allergan. The VanEck Vectors Biotech ETF has 11.7% of its total assets in Gilead Sciences (GILD), 6.9% in Biogen (BIIB), and 10.6% in Celgene (CELG).
Continue to the subsequent parts of this series (below) for a closer look at each individual segment.