- Allergan has had a long history dating back to the 1940s. Over the years it's gone through major acquisitions, including some that have fallen through.
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Allergan started out as a tiny but beloved Southern California eye care firm before expanding to a $130 billion company. Here's how the Botox-maker fell out grace with investors and then became a takeover target. (AGN)
AbbVie is acquiring Botox-maker Allergan in a $63 billion deal , the companies said Tuesday.
Allergan CEO Brent Saunders
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Allergan , the pharmaceutical company best known for making Botox, on Tuesday agreed to be acquired by AbbVie in a $63 billion deal.
Investors had been unhappy with Allergan's stock performance over the last year, and some have been vocal in calling for change .
Here's how the company went from its start as a small but beloved company out of Southern California in the 1950s to the latest takeover target.
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This article was initially published in June 2018 and has been updated.
Allergan was founded in 1948 by pharmacist Gavin S. Herbert, shown below on the left with Dr. Parmis Khatibi, a specialist at the University of California, Irvine Medical Center in 2014.
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Along with chemist Stanley Bly, Herbert created the companys first drug, an anti-allergy nose drop that used the antihistamine neoantergan. They marketed the drug under the name Allergan.
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The eye drops launched Allergan into the eye care field. Allergan Pharmaceuticals Inc. officially became a company in 1950, and the company focused on eye products before going public in 1970.
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Official U.S. Navy Page/flickr
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Allergan briefly merged with drug company SmithKline Beckman in 1980. In 1989, it separated from SKB when it was acquired by SmithKline Beecham (precursors to todays pharma giant GlaxoSmithKline).
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REUTERS/Luke MacGregor
Around that time, the FDA approved a drug to treat lazy eye known as botulinum toxin type A, or Botox. Allergan acquired the company that made the new drug.
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In the 1990s, ophthalmologist Jean Carruthers was treating people with a tight eyelid condition with Botox injections when she realized her patients wrinkles were going away as well. After publishing her findings, dermatologists began to pick up on the off-label use of Botox.
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REUTERS/Mike Segar
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Botox grew so popular that at one point in 1997, the US had run out of its supply, inciting panic for those who used the treatment monthly to reduce wrinkles.
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REUTERS/Shannon Stapleton
Source: The New York Times
It took until 2002 for cosmetic Botox to officially get the FDAs stamp of approval. In 2017, the drug made $2.2 billion in revenue.
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Source: Allergan
By the mid-2010s, Allergan was involved in making treatments that fell under the umbrellas of eye care, "medical aesthetics" (breast implants, dermal fillers, and Botox for wrinkles), neuroscience (Botox is used in a different dose for people with overactive bladders and those with chronic headaches) and obesity.
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In 2014, Allergan looked like the perfect takeover target for Valeant, whose CEO, Michael Pearson (shown below) wanted to turn it into a cash-generating machine.
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Source: Forbes
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In November 2014, generics drugmaker Actavis came in and "saved" Allergan from Valeant, buying the company for $66 billion.
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Actavis CEO Brent Saunders, 44, saw the deal through its close in March 2015, at which point he became the CEO of Allergan Plc - now a Dublin-based global pharmaceutical company.
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In July 2015, Allergan agreed to sell its generic drug business for $40.5 billion to Teva Pharmaceuticals. The move put Allergan in a spot to develop more branded drugs in areas like eye care, aesthetics, gastroenterology, and womens health.
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Source: Teva Pharmaceuticals
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When the deal with Teva closed in August 2016, it left Allergan with $40 billion to spend. Some of that went to repurchase shares, while some went to a series of acquisitions that totaled about $6.5 billion. One of the bigger deals was for a company developing treatments for NASH, a liver condition that Saunders said would become "one of the next epidemic-level chronic diseases we face as a society."
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Allergan and Pfizer tried to strike up a $160 billion merger in 2015, which ultimately didnt go through after the US Treasury released new rules governing so-called tax inversions that undercut the deals key rationale in April 2016.
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In 2017, Allergan struck an unusual deal over its eye drug Restasis. The deal transferred the drugs patents to the Saint Regis Mohawk Tribe, with the intention of giving the drug sovereign immunity from certain patent challenges. It was a controversial move that ultimately became moot after a court invalidated other patents on the drug.
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Going into 2018, things didnt get better for Allergans stock, and investors started getting frustrated, especially as the company went from considering a bid for drugmaker Shire to pulling out in just four hours.
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The frustrations led to a strategic review of the company to figure out what to do next. On the table was everything from share buybacks to acquisitions and even a split of Allergan to separate out its cash-pay businesses like aesthetics.
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Reuters
In 2018, Saunders said at a conference that Allergan was planning to sell its womens health and infectious disease businesses, putting more attention on Allergans four "core" businesses, which are eye care, aesthetics, diseases of the central nervous system, and gastrointestinal conditions. Allergans stock fell on the news, suggesting investors werent satisfied.
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David Teppers hedge fund Appaloosa has been calling for change at Allergan since April 2018. In particular, the firm called for a separation of the chairman and CEO roles, which Brent Saunders held. In February, Appaloosa called for a sale of the company.
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In June, a deal came through. AbbVie said on June 25 that it would acquire Allergan in a $63 billion deal. AbbVie makes the worlds best-selling drug Humira, but is facing competition from other drugmakers starting in 2023. Its betting that Allergans products like Botox can help the company grow through that rocky period.
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See Also:
- We got an exclusive look at the pitch deck that cannabis education platform Green Flower Media used to raise $20 million from top investors
- Here's everything you need to know about Patrick Drahi, the French entrepreneur behind the $3.7 billion Sotheby's deal
- These 5 charts show why London's fintech scene could soon eclipse Silicon Valley's
SEE ALSO: David Tepper now has the go-ahead to go full activist on Allergan if he wants to
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