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Allergan has stepped up its battle to remain Valeant-free. Valeant’s intended prey had commissioned two independent companies – one financial consultancy and one forensic accounting firm – to evaluate a number of concerns regarding the inherent value of Valeant’s business model and stock. After receipt of both financial firms’ reports, Allergan then filed an investor presentation with the US Securities and Exchange Commission detailing its initial concerns about the sustainability of Valeant Pharmaceuticals’ business model, principally in a series of questions (Box). Independently of this, Allergan has received over 500 letters from its customers and multiple medical associations and patient advocacy groups, supporting the decision to reject Valeant Pharmaceuticals’ US$153 per share (US$47 billion) cash offer for the company.

Santen have acquired the rights for a number of MSD’s ophthalmology products in Japan and certain markets in Europe and the Asia Pacific region, subject to regulatory approval. US$600 million will be paid upfront, with additional payments on sales milestones, and Santen is committed to purchasing supplies of the products from MSD for a period of two to five years. The move follows MSD’s recent divestment of its US ophthalmology business to Akorn Pharmaceuticals.

Kala Pharmaceuticals announced last month that they had completed a US$22.5 million Series B financing round. Investors are buying in to a nanotechnology drug formulation platform that enables drugs to topical drugs pass through the mucus layer on the eye's surface, which may eventually enable topical administration of anterior segment therapies.

Questions posed in Allergan’s presentation to the US Securities and Exchange Commission included:
  • What is Valeant’s real organic growth?
  • How have the two largest Valeant acquisitions (Bausch+Lomb and Medicis) performed under Valeant’s ownership?
  • How have other acquisitions performed?
  • Does Valeant have any experience promoting products of Allergan’s scale?
  • How stable is Valeant’s management team?
  • Can Valeant cut US$2.7 billion of Allergan’s expenses without disrupting the performance of the business?
  • What is the relative distribution strength of Allergan vs. Valeant in important emerging markets?
  • Is Valeant’s low tax rate sustainable?
  • Are Allergan’s accounting practices clearly consistent with others in the industry?
  • Is a business model centered on a serial acquisition and cost-cutting strategy sustainable?
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About the Author
Mark Hillen

I spent seven years as a medical writer, writing primary and review manuscripts, congress presentations and marketing materials for numerous – and mostly German – pharmaceutical companies. Prior to my adventures in medical communications, I was a Wellcome Trust PhD student at the University of Edinburgh.

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