Actavis ($ACT) has a lot to do as it works to bring new acquisition Allergan ($AGN) into the fold. And finding ways to grow the California company's products in China is high on the list.
|Allergan CEO David Pyott
As Allergan CEO David Pyott told Bloomberg, it's looking for expansion abroad; last year, Allergan generated 81% of sales in the U.S. and Europe, the news service notes. Pumping up lead seller Botox in China, which boasts an aging population and an expanding middle class that's increasingly able to afford new treatments, could help accomplish that goal.
Increased focus on China is fitting for a company about to enter the ranks of Big Pharma. Heavyweights like Bayer, Sanofi ($SNY) and GlaxoSmithKline ($GSK) have trained their efforts on countrywide expansion for some time now, with the notion that emerging markets growth could counterbalance stagnating U.S. and European markets.
But so far, Actavis has been deriving a lion's share of its growth from North America; last quarter, international revenue increased 15% to $660.7 million, but strong gains in the U.K. and Russia drove much of that leap, the company said. That increase pales in comparison to the $1.6 billion North American swell Actavis posted from its branded drugs alone, thanks to its buyout of Forest Laboratories.
|Actavis CEO Brent Saunders
Also on the post-merger agenda: squeezing out costs. While white knight Actavis saved Allergan from the ax it feared notorious cost-cutter Valeant ($VRX) would bring down on its R&D ops, Actavis has still promised $1.8 billion in savings. "There are clearly synergies," Actavis CEO Brent Saunders said in an interview on Bloomberg Television. "That means we're going to have do some cutting, but we're going to do that very carefully because these are two growing companies."
And then there's the management issue. The company is still deciding which parts of Allergan's team to bring on, Bloomberg notes. Actavis has said that when the deal closes, it will "immediately" appoint two of Allergan's directors to the new company's board--though it hasn't announced who those will be. And it hasn't yet revealed what Pyott's role will be, either.
But Pyott is keeping his focus on the question of "how do I transition the company?" he told Bloomberg. "We like to say this is like a Formula 1 racecar. We want to hand over this car and the keys to Brent and his team so that they can drive really fast."
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