Allergan is arguably the world’s most-hated drug company. It has tried to position itself as a competitor to big pharma. However, it appears to be another roll-up strategy that happens to buy pharmaceutical companies. It has $30 billion in debt and needs to develop new drugs or hike prices on old ones to service that debt. It re-domiciled to Ireland to lower its effective tax rate to below 15%. It will not benefit from President Trump’s tax cuts because it does not pay taxes anyway.
Allergan is also known as one of the more litigious drug companies out there. It will do anything to protect its products. It will suit for patent infringement, develop new indications for a drug right before it comes off patent or block new entrants due to a plethora or spurious claims. Last year it blocked Imprimis (IMMY) from having its compounding drug compete with Allergan’s Restasis in the dry eye market; Imprimis CEO Mark Braum threw a proverbial bitch fit:
“Imprimis will aggressively defend itself against Allergan’s frivolous lawsuit and will take action against Allergan to protect its good name, never yielding to Allergan’s tactics to limit patient choice and drive up the cost of ophthalmic therapies to Americans.
“Allergan, one of the most powerful Big Pharma companies in the world, has filed this lawsuit against one of the smallest pharmaceutical companies in the world, to snuff out any competition to its high drug price strategies. Allergan, a true Goliath, is bent on ensuring that Americans continue to pay the highest possible prices for its drugs.”
Imprimis planned to offer a dry eye competitor at a cost for $1,000 per year, while Allergan priced Restasis at $5,000. Of the 16 million Americans infected with dry eye only around 1 million have a prescription. That’s likely due to the high cost of the drug. Senator Bernie Sanders, Hillary Clinton and President Trump campaigned against price-gouging by drug makers. It prompted the Shock Exchange to ask, “Can Trump Tame North Korea If He Can’t Tame Allergan?”