Actavis rides success of branded drugs and M&A to positive Q3

Actavis CEO Brent Saunders

Actavis ($ACT) has been on an M&A kick, inking deals with Forest Laboratories ($FRX) and Warner Chilcott to get its hands on branded products. Now, the company can celebrate the fruits of that labor.

Revenue for the quarter rang in at $3.68 billion, rising 46% from the previous quarter and beating analysts' expectations of $3.63 billion, according to Reuters estimates. The company expects net revenue to hit $7.4 billion for the second half of 2014 and increased its non-GAAP earnings per share to $6.60 and $6.70 per share.

The company's North American brands revenue grew the most--by far--thanks to those deals. Branded sales for the region hit $1.6 billion, including $427.6 million for its Alzheimer's powerhouse Namenda. More deals are sure to be ahead, too.

As for bringing the newly acquired operations into the fold, Actavis says it's wrapping up. "As you think about our integration of Forest/Actavis, we are firing on all cylinders," Actavis CEO Brent Saunders said during the Q3 earnings call. "My sense is, in terms of decisions and actions taken, we're largely done."

What about Actavis' rumored attempts to buy Allergan ($AGN)? Earlier this month, The Wall Street Journal reported that Actavis was poised to make a move for the California-based company, potentially thwarting a takeover bid from longtime suitor Valeant Pharmaceuticals ($VRX). Saunders is staying mum on that potential deal for now. But in what could be seen as a dig at Valeant's contentious offer for Allergan--especially in light of Saunders' previous tenure at Bausch + Lomb, which Valeant bought in late 2012--the CEO emphasized that his company would "take the high road" in any dealmaking and do what's best for shareholders.

"We've always viewed ourselves as a team that does friendly deals," Saunders said. "Our deals are about value creation, and where people matter, we're not going to do a deal to destroy it."

Meanwhile, Actavis is setting its sights on new M&A targets and dealing with a suit over production of its Alzheimer's drug Namenda. Salix Pharmaceuticals ($SLXP) and Omega Pharma are reportedly on the drugmaker's radar, although Actavis may face competition from Sanofi ($SNY), Perrigo ($PRGO) and Boehringer Ingelheim for Belgium-based Omega.

In September, New York Attorney General Eric Schneiderman sued Forest Laboratories and its new owner, Actavis, for saying it would stop making an original version of Namenda to push patients to switch to a long-acting version of the drug--a move meant to protect the product from looming generic rivals. Actavis then agreed to manufacture the old version for a couple more months to settle the suit.

- read Actavis' earnings statement
- here's the company's 10-Q (PDF)
- get more from Reuters

Special Report: Pharma's top 10 M&A deals of 2014's first half - Actavis/Forest Laboratories

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