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What Allergan Is Buying and Shedding to Gain a Better Position

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Allergan’s growth strategy

When Actavis Plc. acquired Allergan Inc. in March 2015, the company changed its name from Actavis Plc. to Allergan Plc (AGN).

Allergan terms its new industry model as “growth pharma.” It is based on identifying five characteristics that make the company grow at a higher rate and differentiate it from its peers—the big pharma companies growing at a slower pace. 

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Changes in 3Q16

Actavis, now Allergan, is now focused as a brand growth pharma leader. Allergan has undergone numerous small and large acquisitions and divestitures in the last quarter, as follows:

  • Allergan completed the divestment of the ANDA Distribution business to Teva Pharmaceuticals (TEVA) on October 3, 2016. The ANDA Distribution business includes over-the-counter products, generic products, brand products, and specialty products from over 300 manufacturers. These products are distributed to pharmacies, clinics, hospitals, and physicians in the United States.
  • Allergan completed its divestment of its Global Generics business to Teva Pharmaceuticals on August 2, 2016. The deal was valued at $33.4 billion in cash and $5.4 billion in Teva stock.
  • In October 2016, the company completed the acquisition of Vitae Pharmaceuticals to strengthen its dermatology pipeline.
  • In October 2016, Allergan announced the acquisition of MEDI2070, a drug under development for the treatment of Crohn’s disease and ulcerative colitis from MedImmune, an AstraZeneca (AZN) company.
  • In September 2016, Allergan announced the acquisition of Retrosense Therapeutics, a gene therapy company, in order to strengthen its Eye Care pipeline by Retrosense’s first-in-class technology RST-001 for the potential treatment of retinitis pigmentosa.
  • In September 2016, Allergan announced the acquisition of Akarna Therapeutics for the strong pipeline of drugs used in the treatment of Non-Alcoholic Steatohepatitis (or NASH).
  • Allergan announced the acquisition of Tobira Therapeutics for the strong pipeline of drugs for the treatment of NASH, as well as other drugs.
  • On August 11, 2016, Allergan announced the acquisition of Forsight Vision5, a privately held biotechnology company focused on eye care products.

Investors can consider the Health Care Select Sector SPDR ETF (XLV), which holds ~3.6% of its total assets in Allergan, in order to divest the risk. Apart from Allergan, XLV also holds 12.0% of its total assets in Johnson & Johnson (JNJ), 7.8% in Pfizer (PFE), and 4.1% in Gilead Sciences (GILD).

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