uploads/2016/11/Chart-04-5-1.jpg

Understanding Allergan’s 3Q16 Revenue Stream

By

Updated

Allergan’s 3Q16 revenues

As we discussed earlier, Allergan (AGN) reported revenues of $3.62 billion in its 3Q16 results—more than 4.5% revenue growth in 3Q16 compared to $3.47 billion in 3Q15. The loss of exclusivity of Asacol HD, Namenda XR, and Namenda IR, and divestitures impacted the growth during 3Q16.

The above graph shows Allergan’s revenues in each quarter. The major portion of its revenues are through sales in the US markets. The company reclassified its operations into three business segments—US General medicine, US Specialized therapeutics, and International business. As we discussed earlier, the company completed the divestiture of the global generics business and announced the divestiture of its Anda distribution business to Teva Pharmaceuticals on August 2, 2016. Both of these businesses are reported in discontinued operations since its 3Q16 earnings.

Article continues below advertisement

Revenue performance

Allergan’s business is classified into three segments. The changes on a year-over-year basis are as follows:

  • The US Specialized Therapeutics segment includes the eye care, medical aesthetics, medical dermatology, and neuroscience and urology franchise. The revenues for US Specialized Therapeutics rose 12.1% to $1.45 billion during 3Q16—compared to $1.30 billion during 3Q15. The growth was driven by a 14% increase in revenues for medical aesthetics products which grew due to the strong performance of Botox, fillers, and new product Kybella. The increased revenues were also due to a 13% increase in revenues for eye care products due to strong uptake of Ozurdex and Restasis.
  • The US General Medicine segment includes the central nervous system, gastroenterology, women’s health, anti-infectives, and established brands franchise. The revenues for the US General Medicine segment fell 4.1% to $1.49 billion during 3Q16—compared to $1.55 billion in 3Q15. The decline in revenues was due to lower sales of Namenda IR. It was partially offset by increased sales of Linzess, Lo Loestrin, and new products Viberzi and Vraylar.
  • The revenues for the International segment rose 5.6% to $698 million for 3Q16—compared to $661 million for 3Q15. The segment reported operational growth of 12%, offset by a 6.4% negative impact of foreign exchange, and few product revenues reported in discontinued operations. The growth was driven by an increase in sales in the Europe and APAC regions due to double-digit growth in sales of Botox, fillers, and eye care.

Investors can consider ETFs like the VanEck Vectors Biotech ETF (BBH) which holds ~9.0% of its total assets in Allergan, 11.7% in Gilead (GILD), 10.6% in Celgene (CELG), and 6.9% in Biogen (BIIB), in order to divest risk.

Advertisement

More From Market Realist