Dive Brief:
- With its base of operations in Ireland, specialty drugmaker Allergan said it was optimistic that any tax reforms under President Donald Trump's administration would be beneficial to the company, though some worries persist.
- "With respect to tax reform, we are plugged in," Allergan CEO Brent Saunders said in an earnings call Wednesday. "I think there's a lot of discussion, yet there's no real plan yet for what tax reform will look like nor when it will appear. But I do think most of the proposals we see would be beneficial to a company like Allergan or situated like Allergan."
- One potential reform that could hurt Allergan, though, is a border adjustment — a tax initiative that makes companies factor in import costs when determining revenues — according to Saunders, who added that it's something his company is keeping its eye on.
Dive Insight:
Of all the changes Trump's administration could impose on the pharmaceutical industry, tax reform is one of the most closely watched and anticipated. After all, drugmakers keep billions of dollars offshore due to current U.S. corporate tax rates. Reform could reduce the amount those companies would lose by bringing that cash back into the country.
Allergan is confident, though, that any negative impact to Allergan from a border adjustment tax would be minimal, or at least not materially worse than any other drugmaker based outside the U.S.
Saunders also touched on drug pricing. Saunders is one of the more outspoken CEOs across pharma, publicly opposing issues Trump's travel ban and taking a stance on rising drug costs. Having pledged to keep price hikes for its branded products to less than 10% per year, and to only institute those hikes once a year at most, it wasn't surprising that pricing came up during the Feb. 8 call.
"We are pleased to see a number of our peers are following our lead, and have become more vocal about the actions they're taking to price their products responsibly," he said in the call.
Overall, Allergan had a solid performance in the fourth quarter and gave 2017 guidance that brackets analyst estimates, according to a note from Evercore ISI analyst Umer Raffat. Net revenues increased 7.1% from the same period in 2015 to $3.86 billion, while fiscal year sales jumped nearly 15% to $14.6 billion from the year prior.
Eye treatment Restasis (cyclosporine ophthalmic emulsion), constipation medication Linzess (linaclotide), and the cosmetic drug Botox (onabotulinumtoxin A) buoyed Allergan sales in the quarter, offsetting weaker performances from Namenda XR (memantine hydrochloride) and Asacol HD (mesalamine), which suffered from higher rebates and loss of patent exclusivity, respectively.
Allergan stock was up 2.2% to $237.83 per share in Wednesday morning trading.