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Allergan seeks pharma partners for obesity business

Posted on 09 January 2013

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Allergan,big pharma company, and the maker of the Botox wrinkle treatment, seeks pharma partners for its weight- loss unit. They wish to sell the business by the end of the first quarter, Chief Executive Officer David Pyott said.

Allergan said in October it would consider a sale of the obesity business, including the Lap-Band device, as revenue declined and concerns rose about the weight-loss procedure. This announcement was soon followed by a confirmation of the very idea and hence the search for pharma partners.

“There’s a lot of interest, some strategic companies, but especially in terms of numbers, private equity players,” Pyott said yesterday in an interview at the annual health-care conference sponsored by JPMorgan Chase & Co. in San Francisco. “Sometime in the first quarter this will come to pass.”

Allergan in November said it would buy a unit of SkinMedica Inc. for $350 million to expand its skin-care business. Botox, with about $1.6 billion in 2011 sales, is the Irvine, California-based company’s best seller.

Revenue for the obesity intervention unit will be about $160 million in 2012, the company said in a statement in October. Sales declined from $203.1 million last year and a peak of $296 million in 2008, the company reported. In the advent of these events engaging in a pharma partners deal is thought to improve the sitaution.

Questions about the durability of weight loss with the Lap- Band device and the risks that accompany it may have hampered sales. Almost half of patients getting gastric banding had the device subsequently removed, often because of erosion, according to a Belgian study published in 2011. The company dropped its plans to market the Lap-Band for teenagers at the beginning of 2012, amid congressional criticism and lawsuits.

General Surgery

Allergan has struggled to find efficient ways to sell the Lap-Band, essentially its only product in the general surgery market. While the company considered going deeper into the surgical mix with new offerings, those have even lower gross margins, Pyott said last October in announcing the decision to sell the business.

The company rose less than 1 percent to $98.86 at the close of New York trading. The shares have gained 14 percent in the past 12 months.

Pyott declined yesterday to say which bank is running the auction of the obesity business.

 

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