UPDATE: Strong Botox Sales Help Lift Allergan's Profits 16%

--Botox sales of about $475 million, the most ever, help boost earnings 16%

--Expenses to rise in 2013 on increased R&D spending, U.S. health-care costs

--Allergan continues expansion beyond beauty and cosmetic drug roots

(Adds details and company comments throughout.)

 
   By Joseph Walker 
 

Allergan Inc.'s (AGN) fourth-quarter earnings rose 16% as the company grew the use of its face-wrinkle medication Botox for medical conditions like chronic migraines and overactive bladders.

Overall, Botox sales surged 14% to $474.6 million in the fourth quarter, outpacing total revenue growth of 7.6% in the period to $1.51 billion, Allergan said.

Medical use accounted for more than half of Botox sales last year and could grow to about 60% in five years, Chief Executive David Pyott said in an interview, signaling Allergan's continued expansion beyond its roots in beauty and cosmetic drugs.

The company recently said it would acquire Map Pharmaceuticals Inc. (MAPP), the maker of an experimental migraine treatment that Allergan will couple with Botox as a soup-to-nuts chronic headache offering. By adding Map's Levadex drug, which is awaiting regulatory approval, Allergan intends to establish Botox as "a mega-brand, not just the world-famous eraser of wrinkles," Mr. Pyott said.

Allergan shares recently rose 1.2% to $106.30. The stock is up 16% so far this year as the company gained approvals for Botox in new medical settings and geographical markets.

The company also is in the process of jettisoning its lap-band obesity business, which has been a drag on sales growth, and is discussing selling the brand with potential purchasers. The lap-band business declined 10% in the fourth quarter, and Mr. Pyott said Allergan is in the later stages of negotiations with several private-equity firms.

Allergan expects its total costs to increase in 2013 as the company looks to advance other medical products to market, including a treatment for vision loss. As a result, research and development expenses are seen rising 8%.

"We expect to invest over $1 billion on R&D in 2013, marking a notable increase from 2012," Mr. Pyott said. Allergan said it would discontinue development of experimental drug programs that it decided would not be meaningful contributors to its growth strategy.

In addition, continued pricing pressures in Europe, combined with increased expenses from the U.S. health-care overhaul and medical-device excise tax, will result in $35 million in extra costs in 2013, Mr. Pyott said.

For the year, the company projected per-share earnings of $4.75 to $4.83, slightly above analysts' estimates. However, for the current quarter, Allergan forecast per-share earnings of 94 cents to 96 cents, below expectations of $1.03.

In the fourth quarter, profits rose to $324.2 million, or $1.06 a share, from $279.8 million, or 90 cents a share, a year earlier. Excluding acquisition-related charges and other items, adjusted per-share earnings rose to $1.15 from $1, but fell short of the company's October forecast of $1.18 to $1.20.

European sales grew in the double-digits, Mr. Pyott said, despite what he called a "challenging" market hampered "by government-mandated price cuts" as countries there grapple with sovereign debt.

--Tess Stynes contributed to this article.

Write to Joseph Walker at [e-mail]

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