Allergan ($AGN) is putting finishing touches on a $50 million expansion of its flagship plant in Waco, TX, but CEO Brent Saunders says the drugmaker may be looking to the facility for more capacity and add jobs as result.Allergan CEO Brent Saunders
On Friday, Saunders visited the 400,000-square-foot plant where the drugmaker produces both eye-care and dermatology products, the Waco Tribune-Herald reports. The expansion, announced last year, is adding both development and production facilities, including new sterile production lines.
The plant currently employs about 750 people and, according to a Baylor University study, will pump about $450 million into the Central Texas economy this year. But Saunders suggested the company might need to double capacity and add hundreds more jobs. He didn't say what specifically would trigger another expansion, but one analyst told clients the unspoken suggestion may be that it would happen if its $160 billion tax inversion merger with Pfizer ($PFE) is completed this year.
In a note to investors, Bernstein analyst Ronny Gal said the flagging of the Baylor study by Allergan is likely a "reminder for Congress that taxes are not the only benefit they provide and maybe silently hinting that without (the Pfizer) deal other measures may need to be taken."
The Baylor study also said that Allergan is projected to pay $3.84 million in local property taxes in 2016. A lot more tax money would be lost, however, if the merger is completed and Pfizer assumes Allergan's Dublin, Ireland, corporate domicile. Pfizer has said that its tax rate would drop to about 18% from about 25% now as a result of the merger and a move of its corporate headquarters to the lower tax country.
The companies have indicated the merger would result in about $2 billion in cost savings, but Pfizer CEO Ian Read has also said he does not expect a lot of job losses as a result. Allergan has already been shedding hundreds of jobs from its supply chain as a result of several of its earlier mergers. It said last year it would close a plant in Iceland and cut 300 jobs, as well as close some packaging facilities in New York, with the loss of another 300 there.
- read the WacoTrib.com story
- here's the Allergan release