Where could Allergan’s cost cuts fall? DTC spending, for starters

Bill Meury
Allergan commercial chief Bill Meury said Wednesday that social media could help make Allergan's DTC spending more efficient.

When Allergan CEO Brent Saunders announced Wednesday that cost cuts would come “rapidly,” he didn’t offer any insight as to where in the business those cuts would be. But commercial chief Bill Meury did.

Allergan’s investment level over the past year and a half or so has been “fairly high,” thanks to a dozen new products or indications. And “for some of those businesses, the investment level's got to be moderated,” Meury said on Allergan’s third-quarter earnings call.

One way the company might do it? Cutting back on DTC spending. “A big part of our DTC budget is national television advertising, and there are social media and other analytics techniques that are emerging, I think, that are going to allow us to do that a lot more efficiently,” Meury said, adding that “as efficiently as I think we run this operation, there's room to make some changes.”

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That’s not to say Allergan—one of the largest direct-to-consumer advertisers in the country, by Meury’s description—is backing away from DTC altogether.

The company’s CoolSculpting System, a contouring product picked up through Allergan’s Zeltiq acquisition, is exceeding expectations in the U.S. In response, Allergan has upped its DTC levels “to drive awareness and demand,” Meury said.

The Dublin drugmaker is also launching a nationwide DTC effort for antipsychotic Vraylar in bipolar mania. And DTC continues to play a role in Allergan’s efforts to help GI med Viberzi bounce back from a contraindication, Meury said.

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But Allergan, which could soon see generic competition to second-best-seller Restasis after a recent patent ruling, needs to squeeze out savings somewhere, and Saunders assured investors it would happen in “a way that protects the long-term growth drivers.”

“That’s what we get paid for as management,” he said, adding that, “We need to manage this business to protect our shareholders while not sacrificing future growth.”