David Pyott
David Pyott, chairman and CEO of Irvine-based Allergan Inc., said his company is positioned to grow despite the economic downturn, because it has plenty of cash, product diversity and new products in the pipeline. He sat for an interview this morning. Some excerpts.
Q. What’s your reading of the economic outlook?
A. For our purposes, all of 2009 will be tough. Business outside the U.S. has seen huge growth — Asia, Latin America and Europe — and clearly that’s slowing down. Economies driven by commodities, like oil, are coming down.
Q. What’s the outlook for Allergan?
A. About one-third of our sales are consumer funded and two-thirds are reimbursed through insurance. We’re seeing a decline in our bioaesthetics like Botox and breast enhancements and even lapbands. In 2000, about one-quarter of lapband (weight loss) procedures were out of pocket, which is $14,000 to $15,000. Even with insurance coverage, there’s $2,000 to $3,000 out of pocket. People are deciding they need to pay their mortgages or credit cards.
Q. Your stock has been down. How would you say markets are reacting?
A. The two days after we put out our quarterly guidance, a somber outlook for Q4, our stock went up 20 percent. People were relieved. The real thing we did is remind the market about the number of our products in the FDA pipeline.
Q. What are some of those products?
A. There’s the eyelash growth product, Lumigan, sometimes referred to in the media as Lumilash. It’s in a strategic sweetspot. No injections, but it’s for the same market as Botox. … In 2010, we’ll be able to use Botox for chronic daily headaches, which is migraines. We’re doing clinical trials to use Botox for incontinence. That’s about three years off. Now we’re launching a line of products with Clinique that will be sold only in doctors’ offices, no retail. No prescription. Our R&D pipeline is really cooking. If Wall Street drew a straight line, 2009 would be a difficult year for Allergan if we didn’t have those.
Q. Are they all developed in Orange County?
A. All of them. All of our pure research is here or in partnerships with other companies.
Q. You said you have 2,200 people in Irvine, more than half in R&D. Can you recruit people here?
A. We’re getting people from San Diego, where biotech is in a down cycle, and from Thousand Oaks, where Amgen has been laying off. Pfizer announced they’re closing an ophthalmic R&D center in San Diego. So you can say other people’s misfortune is our good luck.
Pyott was interviewed after speaking at the Global Strategies Conference sponsored by the University of California Irvine’s Merage School of Business and the Orange County Business Council. Comments from more speakers to come.
Related stories …
- Allergan earnings up, outlook down
- Economy hits plastic surgery harder
- Botox patients are getting younger
- Botox gaining ground as career-booster, readers say
- As the economy slows, Botox popularity grows
