Rebel Allergan investors demand C-suite shakeup after 'half-hearted' strategic review

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Investor groups called for Allergan to change up its leadership on Tuesday. (Allergan)

After Allergan unveiled much-anticipated findings from its internal review—disclosing late last month that it's planning to sell its women's health and infectious disease units—some investors still aren't happy. They're so upset, in fact, that they're calling for a shakeup at the top.

In a Tuesday letter to Allergan's board, activist investors at Senator Investment Group and Appaloosa called on the drugmaker to split up the CEO and chairman jobs. That would strip away some of Brent Saunders' powers—he's currently both—at the very least.

They also want a new chairman or CEO from outside Allergan, an "upgrade" to management in key units, and for the company to replace at least two board directors.

And if the company doesn't act, Allergan shareholders "can expect Allergan’s stock price to continue to languish," they wrote. 

Their request comes only days after Allergan touted a plan to sell its women's health and infectious disease units to focus on medical aesthetics, CNS, eye care and GI—four areas where the company believes it holds competitive advantages over rivals.

RELATED: Allergan puts women's health, infectious disease units on the block

But Appaloosa and Senator Investment Group don't see things the same way. They called the plan a "half-hearted attempt to restore strategic momentum" that left the investor community "underwhelmed." 

"It is now clear that fresh thinking is absent from the current regime, thus explaining the market’s complete loss of confidence in the stock," the investors wrote.

Allergan responded in a statement that the company's "board of directors and management welcome input from all our shareholders, and take into account their views." The company has prioritized "board refreshment," and has brought on three new directors over the past 16 months.

Allergan's shares have been under pressure from competitive threats to blockbusters Botox and Restasis, and in January, the drugmaker announced 1,400 job cuts to cope with the Restasis loss of exclusivity. That plan didn't lift investor spirit, and in March the company started a strategic review.

RELATED: Allergan chops 1,400 jobs to cope with early Restasis generics

Saunders previously rejected asset sales, but he endorsed the idea after the layoffs didn't improve investor morale. Analysts, for their part, had at that point been prodding management about the possibility of asset sales for months; RBC Capital Markets analyst Randall Stanicky, for one, has said the women's health unit could bring in $6 billion in proceeds itself.

Meanwhile, Allergan's controversial strategy to protect Restasis patents through a tribal licensing agreement is undergoing legal scrutiny in a federal appeals court. The company previously transferred patents to the Saint Regis Mohawk Tribe and licensed them back to sidestep an inter partes review at the U.S. Patent and Trademark Office, generating widespread criticism.

Editor's note: This story was updated with a statement from Allergan.