Allergan, Inc. reported first quarter 2013 earnings of 98 cents per share, beating the Zacks Consensus Estimate of 96 cents per share by 2 cents.
While earnings increased 18.1% from the year-ago quarter, revenues increased 8.3% to $1,459.6 million, above the Zacks Consensus Estimate of $1,443 million.
The Quarter in Detail
Specialty pharmaceuticals sales increased 8.1% to $1,231.8 million, with eye-care, pharmaceutical, Botox and skin-care sales driving growth.
Eye-care pharmaceutical sales increased 2.5% to $668.6 million with products like Restasis (up 11.3%), Alphagan franchise (up 4.1%) and the Latisse (up 6.9%) contributing to growth.
Allergan continues to expect Lumigan franchise sales to increase to $630 million - $660 million in 2013. Meanwhile, Alphagan franchise sales are still expected in the range of $440 - $470 million in 2013.
Restasis sales are expected to increase to $850 million - $890 million in 2013 (previous guidance: $830 million - $870 million). Allergan continues to expect Latisse sales to increase to $110 million in 2013.
Botox sales increased 14.8% year over year to $457.9 million. In Jan 2013, the Food and Drug Administration (FDA) approved Botox for the treatment of patients suffering from overactive bladder (OAB) with symptoms of urge urinary incontinence, urgency and frequency. The drug can be used in adults with OAB, who have not responded adequately to, or, are intolerant to anticholinergic medication.
Allergan increased the lower end of its 2013 Botox sales guidance by $20 million and now expects 2013 Botox sales in the range of $1,920 million - $2,000 million (previous guidance: $1,900 million - $2,000 million).
Meanwhile, Allergan’s medical devices segment posted sales of $200.7 million, up 10.2%. While breast aesthetics sales decreased 8.9% to $89.6 million, facial aesthetics sales increased 32.6% to $111.1 million.
Allergan is looking to sell the obesity intervention segment and expects to do the same in mid-2013. We note that the obesity intervention unit is treated as discontinued operations from the first quarter of 2013.
Selling, general and administrative (SG&A) expenses increased 5.9% during the quarter to $586.9 million. Research and development (R&D) expenses amounted to $248.8 million, up 13.2%.
2013 Earnings Guidance
Allergan now expects 2013 earnings of $4.70 - $4.76 per share as compared to previous guidance of $4.75 - $4.83 per share. The guidance excludes the impact of the R&D tax credit signed into law earlier this year. The Zacks Consensus Estimate currently standing at $4.76 per share.
The company expects product net sales to range from $5,975 - $6,200 million in 2013 (previous guidance: $5,900 million - $6,200 million).
For 2013, Allergan expects total specialty pharmaceuticals net sales of $5,175 million - $5,340 million (previous guidance: $5,100 million - $5,340 million).
The company continues to expect medical devices net sales of $800 million - $860 million. Here, performance will be driven mainly by facial aesthetics. Facial aesthetics sales are still expected in the range of $410 million - $440 million.
Breast aesthetics sales are continued to be expected in the range of $390 million - $420 million.
For 2013, Allergan reiterated its cost guidance and expects cost of sales to product net sales ratio of about 13.5%, SG&A expenses to product net sales ratio of 37% - 38% and R&D expenses to product net sales ratio of 16.5%.
Allergan expects second quarter earnings in the range of $1.18 - $1.20 per share on product net sales of $1,500 million and $1,575 million. We note that Allergan’s guidance includes the dilutive impact of MAP Pharmaceuticals acquisition. The Zacks Consensus Estimate currently stands at $1.23 per share, above the company’s guidance range.
Allergan currently carries a Zacks Rank #3 (Hold). While we believe Allergan’s presence across different segments will help maintain growth going forward. Stocks that look better at present include AbbVie (ABBV - Analyst Report) which carries a Zacks Rank #2 (Buy). UCB (UCBJF) and Onyx Pharmaceuticals, Inc. also look well-positioned with a Zacks Rank #1 (Strong Buy).