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Allergan to axe over 1,000 positions in cost cutting measures

Published on 04/01/18 at 09:21am

Allergan was never far away from the headlines in 2017, particularly when it came to its second highest selling product, Restasis.

The company tried everything to avoid losing patent protection on the product, including a controversial deal with a Native American Tribe, but the efforts failed and Allergan expects Restasis competition to arrive early this year.

As a result of expected drop in sales, Allergan has announced that it plans to cut away 1,000 existing positions and to remove a further 400 open positions. The job cuts will be from within the commercial side of the business and “other functions”, with a focus on products and categories subject to loss of exclusivity.

Allergan announced that it expects to incur restructuring costs of approximately $125 million, mainly due to severance pay, in order to achieve savings of between $300 and $400 million.

Brent Saunders, CEO of Allergan, had already signalled this would happen in a conference call with investors during the company’s third quarter financials, commenting: “we know how to take costs out of our company while maintaining the right level of investment to drive future growth. We’ve done this before.”

The mention of previous layoffs are a reference to the frequent restructures that took place after Actavis acquired Allergan, which led to a number of positions being jettisoned – particularly in Allergan’s Irvine base, where thousands of positions were lost.

The cuts will have to be relatively deep this time round, as Restasis brought in $1.5 billion in sales during 2016, approximately 10% of the company’s revenue, but, with generic competition from Mylan and Teva likely this year, a drastic reduction is expected to that figure in 2018.

It couldn’t be argued that Allergan didn’t try to fight the patent loss tooth-and-nail, with a deal with a Native American tribe even attempted to block IPRs against Restasis.

The manoeuvre, widely derided across the industry, came to nought after a judge ruled that the patents protecting the product were invalid in a separate case.

Ben Hargreaves

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