Botox maker Allergan announced sales and earnings per share growth above the high end of its expectations, but it will cut 1,500 jobs, or about 13% of its workforce as it continues to avoid a $54bn hostile takeover bid from Valeant Pharmaceuticals.
The job cuts and further restructuring - which will include the closure of three sites in Santa Barbara and Carlsbad, CA, and Medford, MA - will lead to savings of about $475m next year, the Irvine, California-based company said.
As far as job cuts are concerned, the company will see its R&D staff cut by 33%, or 700 employees, while the sales force would only fall by 6%, or 250 employees.
The company began to record costs associated with its restructuring plan in the first quarter of 2014 and expects that the majority of the expenses will be incurred this year, with the exception of expenses related to the relocation of a minor manufacturing facility in 2015.
Despite the layoffs and closures, the company still expects to invest between $200m and $250m for manufacturing and administrative facilities, manufacturing equipment and other property, plant and equipment during 2014.
Allergan is also looking to form new strategic partnerships with global CROs to reduce its overhead and wages, which it projects will save the company $65m.
As far as a re-working of its pipeline, Allergan has decided to cancel four current early stage discovery projects, as well as four pre-clinical projects, with projected approval dates coming after 2020.
In a conference call on Monday, Allergan CEO David Pyott cited the prospect of future M&A or possible share buybacks as ways to entice shareholders away from a possible deal with Valeant. He also left the door open for adding a new therapeutic area to the company’s arsenal, noting it could be a platform for future growth.
As far as the discussion around Valeant’s bid, Pyott sounded defiant in questioning the performance of Valeant’s recently purchased Bausch and Lomb for $8.7bn, adding, “It’s up to Valeant to explain what’s going on.”
Valeant on Monday complained to the US Securities & Exchange Commission and financial regulators in Quebec about Allergan’s attempts “to mislead investors and manipulate the market for Valeant common shares by continuing to make false and misleading statements.”
“We can no longer tolerate unjustified attacks on Valeant’s business and strongly believe we are obligated to take action to protect Valeant shareholders from Allergan's apparent attempts to mislead investors and manipulate the market for Valeant stock,” Valeant CEO Michael Pearson said in a statement released on Monday.
Pyott stressed to shareholders on Monday that the company has increased its standalone value and reduced synergies that would have made the company attractive to Valeant.