Actavis' $66-Billion Bid for Allergan: A New Top 10 Pharma Company in the Making


From DCAT Value Chain Insights (VCI)

By Patricia Van Arnum posted 11-18-2014 15:16

  

Actavis’ $66-billion bid for the specialty pharmaceutical company Allergan is the second major acquisition for Actavis this year following its $28-billion acquisition of Forest Laboratories. A look at a possible combination of Actavis and Allergan.

 
 
Paul Bisaro
Executive Chairman
Actavis 
Actavis’ $66-billion bid for the specialty pharmaceutical company Allergan is the second major acquisition for Actavis this year following its $28-billion acquisition of Forest Laboratories, which was completed in July 2014. The transaction, subject to shareholder approval and customary closing conditions, has been unanimously approved by the boards of directors of Actavis and Allergan and is supported by the management teams of both companies. If the deal proceeds as planned, a combined company of Actavis and Allergan would have 2015 pro forma revenues in excess of $23 billion, making it one of the top 10 global pharmaceutical companies. So what would a combined Allergan and Actavis be? DCAT Value Chain Insights (VCI) takes an inside look.

Examining the deal
Actavis and Allergan have entered into a definitive agreement under which Actavis will acquire Allergan for approximately $66 billion in a cash-and stock deal. The agreement follows an unsuccessful effort by Valeant Pharmaceuticals International to acquire Allergan, with its most recent effort being a takeover bid for approximately $53 billion in which Allergan shareholders were scheduled to vote on in mid-December, a deal in which Valeant says it will no longer pursue. Under the deal between Actavis and Allergan, Activis is offering a combination of $129.22 in cash and 0.3683 Actavis shares for each share of Allergan common stock. Based on the closing price of Actavis shares on November 14, 2014, the transaction is valued at approximately $66 billion, or $219 per Allergan share. The combination will create one of the top 10 global pharmaceutical companies by sales revenue, with combined annual pro forma revenues of more than $23 billion anticipated in 2015 (see related sidebar, “Ranking a Combined Allergan and Actavis”).

The transaction is subject to the approval of the shareholders of both companies, as well as customary antitrust clearance in the US, the European Union (EU), and certain other jurisdictions, and is anticipated to close in the second quarter of 2015. The combined company will be led by Brent Saunders, CEO and president of Actavis, and Paul Bisaro, who will remain as executive chairman of the board of Actavis. The integration of the two companies will be led by the senior management teams of both companies, with integration planning to begin immediately. Additionally, two members of the Allergan board of directors will be invited to join the Actavis board of directors following the completion of the transaction.

“This acquisition creates the fastest growing and most dynamic growth pharmaceutical company in global healthcare, making us one of the world’s top 10 pharmaceutical companies,” said Brent Saunders, CEO and president of Actavis, in a company statement. “We will establish an unrivaled foundation for long-term growth, anchored by leading, world-class blockbuster franchises, and a premier late-stage pipeline that will accelerate our commitment to build an exceptional, sustainable portfolio. The combined company will have a strong balance sheet, growing product portfolios, and broad commercial reach extending across 100 international markets. Our combined experienced management team is dedicated to driving strong organic growth while capturing synergies and maintaining a robust investment in strategically focused R&D."

 
 
Brent Saunders
President and CEO
Actavis

The acquisition expands Actavis' specialty brand portfolio and its presence in international markets. "With pro forma revenues in excess of $23 billion anticipated in 2015, this combination doubles the revenue generated by our brands business and doubles the international revenue of the combined company," said Saunders in the release. "Management is committed to maximizing the potential for the combined company to drive industry-leading top and bottom line growth. With this combination, we plan to transform the growth profile of our pharmaceutical business and have the ability to generate organic revenue growth at a compound annual growth rate of at least 10% for the foreseeable future.”

Paul Bisaro, executive chairman of Actavis, added: "This combination will greatly enhance our US and international commercial opportunities. In the US, the combination makes us more relevant to an even broader group of physicians and customers. Overseas, it will enhance our commercial position, expand our portfolio, and broaden our footprint in Canada, Europe, and Southeast Asia, and other high-value growth markets, including China, India, the Middle East, and Latin America."

The addition of Allergan’s portfolio, including multiple blockbuster therapeutic franchises, doubles the revenues of Actavis’ North American Specialty Brands business. On a pro forma basis for the full-year 2015, the combined company will have three blockbuster franchises each with annual revenues in excess of $3 billion in ophthalmology, neurosciences/central nervous system, and medical aesthetics/dermatology/plastic surgery. The specialty product franchises in gastroenterology, cardiovascular, women’s health, urology, and infectious disease treatments will have combined revenues of approximately $4 billion.

With the acquisition, Actavis’ revenue position would largely be centered on branded specialty pharmaceuticals. North American Branded Pharmaceuticals would constitute 52% of its revenue, followed by North American Generics at 19%, Actavis International at 11%, Allergan International at 10%, and the Actavis’ Anda business at 8%. The Anda Distribution business of Actavis distributes generic and select brand pharmaceutical products, vaccines, injectables, and over-the-counter (OTC) medicines to independent pharmacies, alternate care providers (hospitals, nursing homes and mail order pharmacies), pharmacy chains, and physicians’ offices. The combined company will have approximately $5 billion in pro forma 2015 international revenue. Together, Actavis and Allergan will have a commercial presence across 100 markets, including an enhanced presence across Canada, Europe, Southeast Asia, and Latin America and a strong footprint in China and India. Also, the combination is expected to add approximately 15 projects in near- and mid-term development to Actavis’ development portfolio.

Ranking a Combined Allergan and Actavis
Upon completion of Actavis $66-billion acquisition of Allergan, the combined company is expected to have pro forma sales in excess of $23 billion, which would place Actavis among the top 10 global pharmaceutical companies. Below is a ranking of the top pharmaceutical companies, as of December 2013:
  1. Novartis ($50.576 billion)
  2. Pfizer ($44.330 billion)
  3. Sanofi ($38.181 billion)
  4. Merck & Co. ($36.350 billion)
  5. Roche ($36.146 billion)
  6. GlaxoSmithKline ($32.544 billion)
  7. Johnson & Johnson ($30.784 billion)
  8. AstraZeneca ($30.257 billion)
  9. Teva ($24.258 billion)
  10. Eli Lilly and Company ($23.045 billion)
  11. Amgen ($18.621 billion)
  12. AbbVie ($18.150 billion)
  13. Boehringer Ingelheim ($17.375 billion)
  14. Bayer ($17.276 billion)
  15. Novo Nordisk ($14.300 billion)
US$ Sales and Rank are in US$ with quarterly exchange rates. Sales cover direct and indirect pharmaceutical channel wholesalers and manufacturers. The figures above include prescription and certain over the counter data and represent manufacturer prices.

Source: IMS Health MIDAS, December 2013.
Actavis projects that the transaction will generate at least $1.8 billion in annual synergies commencing in 2016, in addition to the $475 million of annual savings previously announced by Allergan in connection with Project Endurance, a cost-savings initiative under which Allergan plans to reduce its workforce by approximately 1,500 employees, or approximately 13% of its current global headcount and eliminate an additional approximately 250 vacant positions. The $1.8-billion in annual synergies as a result of the proposed Allergan and Actavis combination excludes manufacturing and revenue synergies and is broken out as follows: approximately $450 million to $500 million in financial synergies, which includes tax benefits; $400 million in research and development (R&D) synergies; $150 million to $200 million in saving from cost of goods sold (COGS); $400 million in sales and marketing synergies; and $350 million in savings in general and administrative expenses. Actavis plans to maintain annual R&D investment of approximately $1.7 billion.

In response to the companies' announcement of a proposed acquisition, Valeant said that it will no longer pursue Allergan. "We have seen the announcement that Allergan and Actavis have made, and while we will review any such agreement in determining our course of action, Valeant cannot justify to its own shareholders paying a price of $219 or more per share for Allergan," said J. Michael Pearson , chairman and CEO of Valeant, in a company statement. "Our business is performing extremely well as evidenced by our third-quarter results, our expected strong fourth quarter, and our robust outlook for 2015, and I am confident in our continued ability to generate exceptional shareholder value. We will remain focused on delivering strong organic results and evaluating acquisition opportunities as we always have: prudently, in a disciplined manner, and in the best interests of our shareholders."

Actavis: A company on the move
Actavis, which provides generic, specialty, and OTC products, is headquartered in Dublin Ireland. It posted revenues of $8.68 billion in calendar year 2013. The proposed acquisition of Allergan is the latest in a series of high-profile acquisitions involving Actavis. In July 2014, it closed on the approximate $28 billion acquisition of Forest Laboratories. In October 2012, the generic-drug company Watson Pharmaceuticals Inc. completed its acquisition of Actavis Group; Watson then changed its corporate name to Actavis in January 2013. The combination of Watson and Actavis created the third largest generic-drug company on a global basis and strengthened the company’s position in modified release, solid oral dosage, and transdermal products and broadened its portfolio to include semi-solids, liquids, and injectables. In October 2013, Actavis completed its acquisition of Warner Chilcott plc, which capitalized on the complementary specialty pharmaceuticals strengths and market positions of the two organizations, particularly in women’s health and urology, as well as in gastroenterology and dermatology. These deals were followed by Actavis’ acquisition of Forest Laboratories. Actavis announced the agreement to acquire Forest Laboratories in February 2014 and completed the deal on July 1, 2014 with Forest becoming a subsidiary of Actavis.

Also, in November 2014, Actavis completed its $675 million acquisition of the specialty pharmaceutical company, Durata Therapeutics, which further included contingent value rights (CVRs) entitling Durata Therapeutics to receive additional cash payments of up to $5.00 per share if certain regulatory or commercial milestones related to Durata's lead product, Dalvance (dalbavancin), are met. Dalvance is an antibiotic for treating acute bacterial skin and skin structure infections (ABSSSI) with once-a-week dosing for two weeks. Dalvance was approved by the US Food and Drug Administration (FDA) in May 2014 and was the first drug approved as a Qualified Infectious Disease Product (QIDP). A marketing authorization application for dalbavancin is under review with the European Medicines Agency with a decision anticipated in the first half of 2015. A single-dose regimen of Dalvance is also in late-stage development for ABSSSI, with a supplemental new drug application filing expected by mid-2015. Durata also has plans to continue the development of Dalvance for additional indications, such as hospitalized community-acquired pneumonia and pediatric osteomyelitis.

Actavis is organized into three principal segments (see Table I). Actavis Pharma, which accounted for approximately 75% of the company’s 2013 revenues, manufactures, markets, sells, and distributes generics, branded generics, and OTC drugs. In 2013, the US portfolio consisted of 250 generic pharmaceutical product families. During 2013, the company expanded its generic product line with the launch of approximately 700 generic products globally. Key US generic launches in 2013 included generic versions of Lidoderm (lidocaine topical patch 5%), Suboxone (buprenorphine HCL / nalaxone HCL), Diovan (valsartan), Provigil (modafinil), Desowen (desonide lotion and cream), and Cymbalta (duloxetine HCI).

Table I: Actavis’ Leading Segments, Calendar Year 2013

Segment 2013 Sales
(US$ Millions)
Focus

Actavis Pharma $6,355.9 Manufactures, markets, sells, and distributes generics, branded generics, and over the counter (OTC) drugs. US portfolio consists of 250 generic pharmaceutical product families. During 2013, the company expanded its generic product line with the launch of approximately 700 generic products globally.
Actavis Specialty Brands $1,124.8 Newly developed pharmaceutical products normally are patented or have market exclusivity and, as a result, are generally offered by a single provider when first introduced to the market. The company currently markets a number of branded products to physicians, hospitals, and other markets; it classifies these patented and off-patent trademarked products as its brand pharmaceutical products. Also includes biosimilars. Its portfolio includes 45 brand pharmaceutical product families.
ANDA Distribution $1,196.9 Primarily distributes generic and select brand pharmaceutical products, vaccines, injectables and OTC medicines to independent pharmacies, alternate-care providers (hospitals, nursing homes, and mail order pharmacies), pharmacy chains, and physicians’ offices.
With the Actavis Pharma and Actavis Specialty Brands operations, the company sells its generic and brand pharmaceutical products primarily to drug wholesalers, retailers and distributors, including national retail drug and food store chains, hospitals, clinics, mail order, government agencies, and managed healthcare providers, such as health maintenance organizations and other institutions. In its Anda Distribution business, the company distributes generic and brand pharmaceutical products to independent pharmacies, alternate-care providers (hospitals, nursing homes, and mail-order pharmacies), pharmacy chains, physicians’ offices, and buying groups.

Source: Actavis, 10-K 2013 Annual Filing, US Securities and Exchange Commission.

As part of a strategy to focus on fast-growth emerging markets in Central and Eastern Europe, Actavis decided to divest the Actavis’ Pharma’s commercial infrastructure in France, Italy, Spain, Portugal, Belgium, Germany and the Netherlands, including products, marketing authorizations, and dossier license rights. In January 2014, Actavis announced its intention to form an agreement with Aurobindo Pharma Limited to sell these businesses. The transaction is conditional on certain antitrust approvals and completion of an employee-consultation processes.

The two most significant generic products for Actavis are the authorized generic versions of Concerta (methylphenidate ER) and Lipitor (atorvastatin), which on a combined basis comprised 16% and 21% of its revenues in 2013 and 2012, respectively. During 2011 and 2012, atorvastatin was sold pursuant to an exclusive agreement with Pfizer, and Actavis launched its authorized generic of Lipitor on November 30, 2011. Due to the significant decline in the market for this product, the company agreed to terminate this agreement effective January 1, 2013. In exchange, Actavis will receive a royalty on future sales of the product by Pfizer through 2015.

Actavis Specialty Brands (see Table I) includes both patented and off-patented brand pharmaceutical products as well as biosimilars. The segment, prior to the Forest acquisition, included 45 brand pharmaceutical product families. Actavis Specialty Brands accounted for 13% of the company’s 2013 revenues and consists of brand pharmaceutical products as well as biosimilars. In October 2013, as a result of the Warner Chilcott acquisition, the company began promoting a number of products, including, but not limited to, Actonel, Asacol HD, Atelvia, Delzicol, Doryx, Estrace Cream, Enablex, Lo Loestrin Fe, and Minastrin 24 Fe.

In December 2011, Actavis entered into a collaboration agreement with Amgen to develop and commercialize, on a worldwide basis, biosimilar versions of four biosimilar oncology monoclonal antibodies: Herceptin (trastuzumab), Avastin (bevacizumab), Rituxan/Mab Thera (rituximab), and Erbitux (cetuximab). Amgen assumed primary responsibility for developing, manufacturing, and initially commercializing the oncology antibody products. Actavis will contribute up to $312.4 million in co-development costs over the remaining course of development, including the provision of development support, and will share product-development risks. In addition, Actavis is contributing expertise in the commercialization and marketing of highly competitive specialty and generic markets, including helping effectively manage the lifecycle of the biosimilar products. The collaboration products are expected to be sold under a joint Amgen/Actavis label. The collaboration will not pursue biosimilars of Amgen’s proprietary products.

Actavis also formed a partnership in July 2012 with Synthon, a pharmaceutical company headquartered in Nijmegen, the Netherlands, and acquired an exclusive license to its trastuzumab molecule, which is being developed as a biosimilar to Herceptin. Actavis subsequently contributed the product to its biosimilar collaboration with Amgen. Amgen and Actavis assumed all responsibility for worldwide development and commercialization of biosimilar trastuzumab, including Phase III clinical trials and global manufacturing. The agreement entitles Synthon to an initial payment and the opportunity to receive a milestone payment and royalties on net sales. Synthon also received compensation for transitional support activities provided under the agreement.

The Anda Distribution business of Actavis (see Table I) distributes generic and select brand pharmaceutical products, vaccines, injectables and OTC medicines to independent pharmacies, alternate care providers (hospitals, nursing homes and mail order pharmacies), pharmacy chains, and physicians’ offices.

Three key products gained by Actavis in its acquisition of Forest Laboratories were Nameda, Bystolic, and Viibryd, which accounted for 65% of Forest Laboratories' sales of its patented products in fiscal year 2014. Nameda (memantine HCl), a N-methyl-D-aspartate receptor antagonist for treating moderate to severe dementia of the Alzheimer’s type, was Forest Laboratories top-selling product in fiscal year 2014, accounting for 44% of fiscal year 2014 revenues at $1.50 billion. As part of a strategy for patient conversion to the extended-release formulation due to US patent expiry of Namenda in 2015, in February 2014, Forest announced that it would discontinue the sale of Namenda tablets, effective August 15, 2014. In January 2014, Forest submitted to the FDA data from its pediatric program to extend the Namenda patent. If the FDA finds the submission meets the requirements of the Pediatric Written Request, the company would be entitled to a six-month extension of marketing exclusivity for Namenda. Namenda XR, a once-daily extended-release formulation of Namenda for the treatment of moderate to severe dementia of the Alzheimer’s type, was launched in June 2013 and recorded sales of $135.8 million for the fiscal year ended March 31, 2014.

Under the terms of a license agreement with the German pharmaceutical company Merz Pharmaceuticals, Forest is granted exclusive US marketing (and related manufacturing) rights with respect to products containing memantine for use in the treatment of vascular dementia and Alzheimer’s disease, and Merz has agreed to supply all of Forest’s requirements of the active pharmaceutical ingredient (API), memantine.The Merz license requires that Forest pay to Merz a percentage of its net revenues from the sale of Namenda as a royalty. The agreement expires in 2028.

Bystolic (nebivolol HCl), a beta-blocker indicated for the treatment of hypertension, had sales of $529.6 million in fiscal year 2014, making it Forest Laboratories’  second top-selling patented product in fiscal year 2014 and accounting for 15% of the company's fiscal year 2014 revenues. Forest licenses exclusive US and Canadian rights to Bystolic from Mylan Inc. Mylan licensed the US and Canadian rights to Bystolic from Janssen Pharmaceutica N.V. and obtained Janssen’s consent to sub-license Bystolic to Forest in those territories. In March 2012, Actvis entered into an agreement with Janssen, under which Actavis acquired all US patents and other US and Canadian intellectual property for Bystolic, for $357 million, thereby eliminating all future royalties. Bystolic was launched in Canada in April 2013. Bystolic is protected by a formulation patent that expires in 2015 and a pharmaceutical composition patent that expires in 2021.

Forest’s third-top selling pharmaceutical in fiscal year 2014 was Viibryd (vilazodone HCl), a selective serotonin reuptake inhibitor and a 5-HT1A receptor partial agonist for the treatment of adults with major depressive disorder. The drug accounted for 6% of sales in fiscal year 2014 and totaled sales of $199.0 million. Forest obtained exclusive worldwide rights to Viibryd through its 2011 acquisition of Clinical Data, Inc. The exclusive worldwide rights to develop and market Viibryd are licensed from Merck KGaA. Viibryd has been granted five years of Hatch-Waxman exclusivity that extends to 2016. Viibryd is also protected by a US composition-of-matter patent that expires in 2014. A request for patent-term extension was submitted to extend the composition-of-matter patent to 2019. In addition, there are multiple issued US patents directed to polymorphic forms of Viibryd that extend to 2022.

Allergan: Building a position in specialty pharm
Allergan, headquartered in Irvine, California, focuses on two principal segments: specialty pharmaceuticals and medical devices. The specialty pharmaceuticals segment produces a broad range of pharmaceutical products, including: ophthalmic products for dry eye, glaucoma, inflammation, infection, allergy and retinal disease; Botox for certain therapeutic and aesthetic indications; skincare products for acne, psoriasis, eyelash growth, and other prescription and OTC skincare products; and urologics products. The medical devices segment produces a broad range of medical devices, including: breast implants for augmentation, revision and reconstructive surgery and tissue expanders; and facial aesthetics products. In 2013, Allergan reported sales of $5.339 billion in its specialty pharmaceuticals segment and $858.3 million for medical devices. Within its specialty pharmaceuticals business, eye-care products accounted for 54% or $2.890 billion, and Botox/neuromodulators accounted for 37% or $1.982 billion.

In terms of its product position in specialty pharmaceuticals, Restasis (cyclosporine ophthalmic emulsion) 0.05% is the company’s best-selling eye-care product and according to Allergan, is the largest eye drop by value worldwide, the largest prescription ophthalmic pharmaceutical by sales value in the United States, and the first, and currently the only, prescription eye drop to help increase tear production in cases where tear production may be reduced by inflammation due to chronic dry eye. Allergan launched Restasis in the United States in 2003, and it is currently sold in approximately 40 countries.

The Lumigan (bimatoprost ophthalmic solution) product line is the company’s second best-selling eye care product line. Lumigan 0.01% is a topical treatment indicated for the reduction of elevated intraocular pressure in patients with glaucoma or ocular hypertension. The Alphagan (brimonidine tartrate ophthalmic solution) products are the company’s third best-selling eye-care product line. Alphagan P 0.1%, Alphagan P 0.15%, and Alphagan P 0.2% are ophthalmic solutions that lower intraocular pressure by reducing aqueous humor production and increasing uveoscleral outflow.

As a single product, Botox (onabotulinumtoxinA) is Allergan’s top-selling product, accounting for 32%, 32%, and 31% of the company’s total consolidated product net sales (specialty pharmaceuticals and medical devices) in 2013, 2012, and 2011, respectively. Botox was first approved by the FDA) in 1989 for the treatment of strabismus and blepharospasm, two eye muscle disorders, and Botox Cosmetic was first approved for certain aesthetic use in 2002. For the year ended December 31, 2013, therapeutic uses accounted for approximately 54% of Botox total sales and aesthetic uses 46%.

On a competitive basis, Botox was the only neuromodulator approved by the FDA until 2000, when the FDA approved Myobloc (rimabotulinumtoxinB), a neuromodulator currently marketed by US WorldMeds. In 2009, the FDA approved Dysport (abobotulinumtoxinA) for the treatment of cervical dystonia and glabellar lines, which is marketed by Ipsen, and Valeant Pharmaceuticals, which acquired Medicis Pharmaceutical Corporation in 2012. In 2007, Ipsen granted Galderma, a joint venture between Nestle and the L’Oréal Group, an exclusive development and marketing license for Dysport for cosmetic indications in the EU, Russia, Eastern Europe and the Middle East, and first rights of negotiation for other countries around the world, except the United States, Canada, and Japan. In 2009, the health authorities of 15 EU countries approved Dysport for glabellar lines under the trade name Azzalure. In 2011, Ipsen and Syntaxin engaged in a research collaboration agreement to develop native and engineered formats of botulinum neurotoxin. In 2012, Ipsen and Galderma broadened their existing relationship for Dysport by renewing the sole distribution partnership in Brazil and Argentina, forming a new partnership in Australia, and entering into a co-promotion agreement in South Korea. In 2013, Ipsen announced that Health Canada granted a marketing authorization for Dysport for the temporary improvement in the appearance of moderate to severe gabellar lines in adult patients younger than 65 years of age; Medicis Aesthetics Canada, a division of Valeant, markets Dysport for aesthetic use Canada. In 2013, Ipsen acquired Syntaxin and announced an intention to develop and market a Dysport Next Generation product indicated for glabellar lines and cervical dystonia. In 2013, Galderma also announced an intention to develop an advanced formulation of botulinum toxin for use as a proprietary muscle relaxant. In July 2014, Valeant Pharmaceuticals completed the sale to Galderma of all rights to Restylane, Perlane, Emervel, Sculptra, and Dysport owned or held by Valeant for $1.4 billion pursuant to a previously announced agreement with Nestle S.A, which had earlier acquired Galderma.

In addition, Merz’s botulinum toxin product Xeomin is currently approved for therapeutic indications in most countries in the European Union as well as Canada and certain countries in Latin America and Asia. Xeomin was approved by the FDA in 2010 for cervical dystonia and blepharospasm in adults previously treated with Botox. In 2011, Xeomin was approved for glabellar lines in the United States and Korea. Mentor Worldwide LLC, a division of Johnson & Johnson is conducting clinical trials for a competing neuromodulator for glabellar lines in the United States. In 2013, Valeant entered into a five-year collaboration agreement with Mentor. Revance Therapeutics is currently in a Phase III clinical development program for a topically applied botulinum toxin type A (BoNTA) for the treatment of crow’s feet lines in the United States. Revance has also indicated that it plans to initiate an additional Phase III clinical trial for this indication in Europe by early 2015.

Actavis: R&D and Manufacturing Positions
Table II (see end of article)
and Table III (see end of article) outline the R&D, manufacturing, administrative, and distribution facilities of Actavis (pre-Forest acquisition) and Forest Laboratories. Not including Forest Laboratories, Actavis has commercial operations in more than 60 countries and operated more than 30 manufacturing and distribution facilities on a global basis (see Table II). Its major manufacturing sites are in: Athens, Greece; Barnstaple, UK; Birzebbugia, Malta; Corona, California; Davie, Florida; Nerviano, Italy; Dupnitsa, Bulgaria; Elizabeth, New Jersey; Goa, India; Hafnarfjordur, Iceland; Lincolnton, North Carolina; Fajardo, Puerto Rico; Weiderstadt, Germany and Salt Lake City, Utah.

Prior to its acquisition of Forest Laboratories, Actavis implemented several cost-reduction initiatives, which included the transfer of several solid dosage products from its Corona, California facility to other facilities throughout its manufacturing network and the ongoing implementation of an operational excellence initiative at certain of its manufacturing facilities.The company also announced its intent to close its Pharmapack, Netherlands facility in 2014 and Lincolnton, North Carolina manufacturing facility by 2015, moving the production of certain prescription products to its Salt Lake City, Utah facility and contracting with third parties for the manufacture of certain OTC products. Its manufacturing facilities also include additional plants supporting local markets and alternative dosage forms. It also has development and manufacturing capabilities for raw materials and active pharmaceutical ingredients (APIs) and intermediate ingredients to support internal product development efforts at its facilities in Coleraine, Northern Ireland, and Ambernath, India. Its Ambernath, India facility also manufactures APIs for third parties.

If the acquisition of Allergan is completed as planned, Actavis will also be gaining manufacturing facilities through the acquisition. Allergan manufactures the majority of its commercialized products in its own plants located at the following locations: Westport, Ireland; Waco, Texas; San José, Costa Rica; Pringy, France; and Guarulhos, Brazil. It produces clinical and commercial supplies of biodegradable silk-based scaffolds at a leased facility in Medford, Massachusetts and human fibroblast material in an owned facility in Houston, Texas. It also conducts operations related to the filling of aerosol canisters in a leased facility in Fall River, Massachusetts. Third-parties manufacture a small number of commercialized products for the company. The company is a vertically integrated producer of plastic parts and produces its own bottles, tips, and caps for use in the manufacture of its ophthalmic solutions. Additionally, it ferments, purifies, and characterizes the botulinum toxin used in Botox and produces human fibroblast raw material for products associated with the 2012 acquisition of SkinMedica. It purchases other APIs from third parties as well, according to the company's 2013 annual financial filing.

On a R&D basis, Allergan’s R&D efforts for its ophthalmic pharmaceuticals business continue to focus on new therapeutic products for retinal disease, glaucoma, and chronic dry eye. In 2011, the company entered into a license agreement with Molecular Partners AG under which it obtained exclusive global rights in the field of ophthalmology for AGN-150998, a Phase II proprietary therapeutic DARPin protein targeting vascular endothelial growth factor receptors under investigation for the treatment of retinal diseases. In 2012, it expanded that relationship with Molecular Partners AG by entering into two separate agreements to discover, develop, and commercialize proprietary therapeutic DARPin products for the treatment of serious ophthalmic diseases. The first agreement is an exclusive license agreement for the design, development and commercialization of AGN-151200, a potent dual anti-VEGF-A/PDGF-B DARPin, and its corresponding backups for the treatment of exudative age-related macular degeneration and related conditions. The second agreement is an exclusive discovery alliance agreement to design and develop DARPin  products against selected targets that are implicated in causing serious diseases of the eye. In 2013, Allergan completed an analysis of data from the randomized controlled Phase II trial for AGN-150998 comparing two doses of the anti-VEGF DARPin and Lucentis (ranibizumab), which suggested some product differentiation but did not support directly moving to Phase III. The company completed enrollment in the third stage of its Phase II study to more completely assess safety and efficacy and to guide the potential Phase III study design. Earlier this year, Allergan received approval from the FDA for Ozurdex (dexamethasone intravitreal implant) as a new treatment option for diabetic macular edema in adult patients who have an artificial lens implant (pseudophakic) or who are scheduled for cataract surgery (phakic). Ozurdex is a sustained-release biodegradable steroid implant. It received EU marketing approval earlier this year.

In the area of R&D for neuromodulators, for Botox and Botox Cosmetic, Allergan is focused on expanding the number of new indications and country licenses for the approved indications for Botox, including idiopathic overactive bladder, chronic migraine, adult movement disorders, juvenile cerebral palsy, osteoarthritis pain, premature ejaculation and depression while also pursuing next-generation neuromodulator-based therapeutics, including a targeted neuromodulator for use in post-herpetic neuralgia. In addition, the company is seeking to enhance biologic process development and manufacturing. In 2011, the FDA and Health Canada approved the company’s fully in vitro, cell-based assay for use in the stability and potency testing of Botox and Botox Cosmetic. In 2012, Allergan received positive opinions for this assay in Europe for Vistabel, Vistabex, and Botox. In October 2013, it received a positive opinion from the Agence Nationale de Sécurité du Médicament et des Produits de Santé for use of Vistabel for temporary improvement in the appearance of moderate to severe “crow’s feet lines” seen at maximum smile, either alone or when treated at the same time as glabellar, or frown, lines seen at maximum frown in adult patients. It has secured national licenses in 19 countries of the European Union as well as Norway and Iceland.

In January 2014, Allergan completed a license agreement with Medytox under which it acquired the exclusive rights, worldwide, outside of Korea with co-exclusive rights in Japan, to develop and, if approved, commercialize certain neurotoxin product candidates currently in development, including a potential liquid-injectable product. In March 2013, Allergan also acquired MAP Pharmaceuticals and is seeking to advance the commercialization of Levadex, a drug to treat migraines. Levadex is a self-administered, orally inhaled therapy consisting of a proprietary formulation of dihydroergotamine using MAP’s proprietary Tempo delivery system, which has completed Phase III clinical development for treating acute migraine in adults. In July 2014, Allergan received a Complete Response Letter (CRL) from the FDA for its new drug application (NDA) for Semprana (dihydroergotamine), formerly referred to as Levadex, which is being developed as an acute treatment of migraine in adults. In the CRL, the FDA acknowledged that Allergan has made improvements in the canister-filling process. The two specific items listed in the CRL are related to specifications around content uniformity on the improved canister-filling process and on standards for device actuation. There were no issues related to the clinical safety and efficacy of the product. Allergan received draft labeling from the FDA for the product in June 2013. Allergan plans to meet with the FDA and says it will work to fully address these issues to the satisfaction of the FDA. The company estimates that the next FDA action will occur by the end of the second quarter of 2015. The company is also collaborating with Serenity Pharmaceuticals on the development and commercialization of Ser-120, an investigational drug in clinical development for the treatment of nocturia, a urological disorder.

Table II: Actavis-Owned R&D, Manufacturing, Distribution, and Administration Facilities*

Ag. Varvara, Greece Manufacturing, R&D and Administration Actavis Pharma
Auckland, New Zealand Distribution and Administration Actavis Pharma
Barnstaple, UK Manufacturing and Administration Actavis Pharma
Bucharest, Romania Manufacturing, Distribution, Administration, R&D Actavis Pharma
Corona, California Manufacturing, Warehouse, Distribution Actavis Pharma/Actavis Specialty Brands
Davie, Florida, USA Manufacturing, Distribution, R&D, Administration Actavis Pharma/ Actavis Specialty Brands
Dundalk, Ireland Administration Actavis Specialty Brands
Dupnitsa, Bulgaria Manufacturing Actavis Pharma
Elizabeth, New Jersey Manufacturing, R&D, Administration Actavis Pharma/ Actavis Specialty Brands
Fajardo, Puerto Rico Manufacturing, Packaging Actavis Specialty Brands
Goa, India Manufacturing Actavis Pharma
Gurnee, Illinois Warehousing, Distribution Actavis Pharma/Actavis Specialty Brands
Hafnarfjordur, Iceland Manufacturing, Warehousing, Distribution, Administration Actavis Pharma
Jakarta-Timur, Indonesia Manufacturing, Warehousing, Distribution, Administration Actavis Pharma
Larne, Northern Ireland Manufacturing Actavis Specialty Brands
Leskovac, Serbia Manufacturing Actavis Pharma
Lincolnton, North Carolina Manufacturing, Administration, Warehouse Actavis Pharma
Liverpool, UK Administration, R&D Actavis Specialty Brands
Manati, Puerto Rico Warehouse, Distribution, Administration Actavis Specialty Brands
Mississauga, Canada Manufacturing, R&D, Administration Actavis Pharma
Nerviano, Italy Manufacturing, R&D Actavis Pharma
Rio de Janeiro, Brazil Manufacturing, Distribution, Administration Actavis Pharma
Troyan, Bulgaria Manufacturing Actavis Pharma
Weiterstadt, Germany Manufacturing Actavis Specialty Brands
*As of December 31, 2013.

Company also leases properties for R&D, manufacturing, distribution and warehousing functions. Leased properties are located in the following:
Belgrade, Serbia (Manufacturing, Administration, Actavis Pharma); Birzebbuga, Malta (Manufacturing, Distribution, Administration, Actavis Pharma/Actavis Specialty Brands); Dublin, Ireland ( Administration, Actavis Pharma/Actavis Specialty Brands); Gentofte, Denmark (Administration, Actavis Pharma); Groveport, Ohio (Distribution, Anda Distribution); Haan, Germany (Distribution, Actavis Pharma); Istanbul, Turkey (Administration, Actavis Pharma); Kiev, Ukraine (Administration, Actavis Pharma); Liege, Belgium (Manufacturing, Administration, R&D, Actavis Specialty Brands); London, UK (Administration, Actavis Pharma); Lyon, France (Administration, Actavis Pharma); Moscow, Russia (Administration, Actavis Pharma); Mumbai, India (R&D, Administration, Actavis Pharma); Munich, Germany (Administration, Actavis Pharma); Olive Branch, Michigan (Distribution, Administration, Anda Distribution); Owings Mills, Maryland (Manufacturing, R&D, Administration, Actavis Pharma); Parsippany, New Jersey (Administration, Actavis Pharma/Actavis Specialty Brands); Rockaway, New Jersey (Administration, Actavis Specialty Brands); Salt Lake City, Utah (Manufacturing, Distribution, R&D, Actavis Pharma/ Actavis Specialty Brand); Singapore City, Singapore (Manufacturing, Administration, R&D, Actavis Pharma); Sofia, Bulgaria (Administration, Actavis Pharma); Stockholm, Sweden (Administration, Actavis Pharma); Warsaw, Poland (Administration, Actavis Pharma); Weston, Florida (Distribution, Administration, R&D, Actavis Pharma/Anda Distribution); and Zejtun, Malta (Distribution, Administration, R&D, Actavis Pharma/Anda Distribution).

Source: Actavis


Table III: Forest Laboratories Owned Properties

Location Function
United States
Commack, New York Administration and R&D (2 offices)
Commack, New York Administration, Sales Training, & Warehouse
Hauppauge, New York Warehousing, Administration and Clinical Packaging
Hauppauge, New York R&D
Cincinnati, Ohio Packaging, Warehousing and Administration
Cincinnati, Ohio Manufacturing, Warehousing and Administration (2 offices)
Vandalia, Ohio Manufacturing, Warehousing, R&D
St. Louis, Missouri Manufacturing, Warehousing, Distribution and Administration
St. Louis, Missouri Administration and Data Center
Europe
Clonshaugh, Ireland Manufacturing and Distribution
Baldoyle, Ireland Manufacturing and Distribution
Milan, Italy R&D, Manufacturing and Warehousing
Milan, Italy Manufacturing
Houdan, France Manufacturing and Administration
Canada
Mont-Saint-Hilaire, Canada Administration, Manufacturing and Warehousing
As of March 31, 2014.

Forest Laboratories leases the following properties for specified functions:
Alabama: Birmingham, Administration; California: Oakland, Administration; Emeryville, Microbiology laboratory; New Jersey: Jersey City, Administration; Bridgewater, Administration; New York: New York City, Administration; Commack, Information Technology; Farmingdale, Laboratory Testing; Hauppauge, Hotel facility for housing of sales reps during sales training and lease of welcome center; Ohio: Vandalia, Administration; Various US states: 7 Sales Administration offices; Dartford Crossing, England Administration; Paris, France, Administration; Various countries: Administration (8 offices); Vaughan, Canada, Administration

Source: Forest Laboratories
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