Allergan toys with $5B women's health sale to boost bottom-feeding shares

Allergan California
RBC Capital Markets analyst Randall Stanicky has long contended that a breakup of Allergan could boost its sagging shares. (Image: Allergan)

How times have changed. Just five short months after Allergan’s CEO assured investors that the company wouldn’t break up, it’s reportedly weighing options for its women’s health unit.

The Dublin drugmaker has met with advisers about a potential sale, sources told Bloomberg. And if Allergan does sell the business, which would likely draw interest from private equity firms, it could bring in more than $5 billion.

RELATED: Allergan could sell women's health for $6B, if it would only agree to split: analyst

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Another option? Sell off the portfolio in parts, just as Teva recently did with its own women's health business. As RBC Capital Markets analyst Randall Stanicky pointed out in a note to clients, the Israeli pharma unloaded those assets quickly and at “attractive valuations.”

“We think that there would be buyers here,” he wrote.

Speaking of Stanicky, he’s been calling for an Allergan breakup for months—and for a women’s health sale in particular. Back in November, he predicted a transaction could generate $6 billion, although that was before a liver-safety review of uterine fibroids drug Esmya in Europe cast doubt on the med’s future and pushed back an FDA decision date on the product.

The way he sees it, examining options for women’s health “is a logical first step,” for Allergan as it works to lift its badly battered shares.

RELATED: Forget that 'no breakup' vow. Allergan's CEO now says a strategic review is happening

Initially, Allergan’s management thought it could boost those shares with cost cuts, which it rolled out last year after a Restasis patent decision paved the way for early copycats to the company’s No. 2 seller. But the bad news kept rolling in—complete with word of Mylan's plans for a biosimilar threat to top-selling Botox—forcing Saunders to walk back his previous “no breakup” assurances.

Saunders’ “message was clear that all strategic options are being evaluated,” Stanicky wrote after hearing the skipper speak at a March investor conference, adding that Allergan was taking on the task “with a sense of urgency.”