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Why Does Allergan’s US Brands Segment Have the Largest Revenue?

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The US brands segment

Allergan (AGN) classifies its business into four segments. The US brands segment is the largest revenue contributor and includes various franchises including cardiovascular, urology, central nervous system, eye care, women’s health, and infectious diseases. This segment considers revenues for the branded products within US markets only.

During 2015, revenues for US brands increased by more than 100% to $9.1 billion in 2015 compared to $4.5 billion in 2014. This is due to additional products as a result of acquisitions including Allergan Inc. and Forest Laboratories during 2015. The above chart shows the performance of each franchise during 2015.

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Performance of the US brands segment

The performance of each of the franchises for the US brands segment in 2015 follows:

  • The central nervous system franchise is number one in Alzheimers products. On a pro forma basis, this franchise reported an increase of 30% to $2.5 billion during 2015.
  • The eye care franchise ranks number two globally. On a pro forma basis, this franchise reported 6% growth at $3.4 billion for 2015. For the US brands segment, the eye care franchise reported revenues of $1.8 billion during 2015.
  • On a pro forma basis, the gastroenterology franchise reported a growth of 17% in revenues at $1.6 billion during 2015.
  • Allergan’s women’s health franchise leads in US markets. Revenues increased by 26% to $998 million during 2015.

To avoid risk, investors can consider the Vanguard Growth ETF (VUG), which holds ~1.4% of its total assets in Allergan. They can also consider the Health Care Select Sector SPDR ETF (XLV), which holds ~4.7% of its total assets in Allergan. Apart from Allergan, XLV holds 11.6% of its total assets in Johnson & Johnson (JNJ), 5.6% in Merck & Co. (MRK), and 5.0% in Gilead Sciences (GILD).

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