Botox drives Allergan sales higher, but earnings slip

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Posted 3:33PM on Monday, April 22, 2002

IRVINE, Calif. - Allergan Inc. said Monday its popular anti-wrinkle drug Botox helped drive sales 9.1 percent higher in the first quarter, but net income fell 15.9 percent after restructuring charges, investment losses and accounting changes. Still, the results came in ahead of Wall Street estimates. For the quarter ended March 29, the drug maker said profit declined to $43.8 million, or 33 cents a share, from $52.1 million, or 39 cents a share a year earlier. Revenue increased to $432.2 million from $396.1 million. Sales of eye care drugs, including several for the treatment of glaucoma, increased 9.5 percent to $207.8 million, while revenue from contact lens care products declined 11.7 percent to $56.6 million. Allergan won approval from the Food and Drug Administration this month to market Botox injections as a way to smooth wrinkles on the brow. Previously, the firm could only pitch the drug as a cure for various muscle disorders, although hundreds of thousands of patients were still using it for cosmetic purposes. Allergan said sales of Botox increased 31.1 percent to $88.6 million. A decade ago, Botox sales amounted to only $19.5 million. But for the last two years, Botox injections have been the No. 1 cosmetic procedure in the United States, according to the American Society of Aesthetic Plastic Surgery. Many analysts are forecasting that Botox will eventually produce more than $1 billion of revenue a year for the company. Allergan sells each vile of Botox to doctors for about $400. Gregg Gilbert, a specialty pharmaceutical analyst with Merrill Lynch, estimates it costs the company only $40 to produce. Allergan shares rose above their 52-week low following the FDA decision. But after the company released its financial results, shares lost 3 percent of their value, hitting $66.76 in afternoon trading. Excluding several nonrecurring charges -- among them costs associated with plans to spin off its unit that makes contact lenses and eye-surgery products -- Allergan reported adjusted earnings of $65 million, or 49 cents a share, compared with $53.9 million, or 40 cents a share, a year earlier. Analysts polled by Thomson Financial/First Call had a consensus estimate of 44 cents a share. On a conference call with analysts, chief financial officer Eric Brandt forecast Allergan's pharmaceutical earnings would grow between 22 percent and 25 percent in 2002. The spun-off division, to be called Advanced Medical Optics, should post earnings growth in the mid teens, he said.