'Growth pharma' Allergan misses sales, EPS marks. One-time blip, or new trend?

Allergan

Q3 was not a pretty one for Allergan, which recorded EPS and revenue misses and lowered its full-year guidance. But that doesn’t mean the company isn’t a “growth pharma,” it insists.

The company recorded a top-line haul of $3.62 billion, falling short of $3.68 consensus estimates. Allergan’s non-promoted Established Brands recorded only $155 million compared with $245 million in the year-ago quarter. And Namenda XR--whose net selling price Allergan dropped in the face of Namenda IR generics to keep formulary coverage--also fell by 32%, with generics of ulcerative colitis treatment Asacol taking their toll, too.

And in turn, EPS fell, too, coming in at $3.32 to miss analysts’ $3.56 forecast.

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“The results are far from great. The question now is whether this is an aberration or a new trend line,” Bernstein analyst Ronny Gal wrote in a Wednesday note to clients.

Allergan, though--which has worked to distance itself from Big Pharma with the “growth pharma” title--doesn’t think the misses tell the full story.

“The majority of our top-level products are growing,” CEO Brent Saunders pointed out on the company’s Q3 conference call, highlighting several--including Linzess and Botox--that are expanding at double-digit rates.

“It's a very good picture to have so many products growing so strongly,” Saunders said.

Saunders believes so strongly in Allergan’s future growth that he recently pledged to steer clear of the price hikes that have been sinking the industry’s reputation. Instead, “Our business and our R&D pipeline will sustain our future growth,” he said.

And Gal doesn’t disagree. “Allergan will gradually transition to growth as it overcomes the loss of Namenda XR and decline of Restasis,” he predicted, noting that “this quarter will likely serve to set the floor on this transition.”

Allergan’s new full-year guidance, though, may leave investors wanting. The Dublin drugmaker now says it’ll bring in between $14.45 billion and $14.65 billion this year, down from the $14.65 billion to $14.9 billion range it previously predicted. And that means Q4 revenues will track between $3.35 billion and $3.55 billion--well below Wall Street’s $3.9 billion expectation, Evercore ISI's Umer Raffat noted.

- read the release

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