Corante

About this Author
DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

Chemistry and Drug Data: Drugbank
Emolecules
ChemSpider
Chempedia Lab
Synthetic Pages
Organic Chemistry Portal
PubChem
Not Voodoo
DailyMed
Druglib
Clinicaltrials.gov

Chemistry and Pharma Blogs:
Org Prep Daily
The Haystack
Kilomentor
A New Merck, Reviewed
Liberal Arts Chemistry
Electron Pusher
All Things Metathesis
C&E News Blogs
Chemiotics II
Chemical Space
Noel O'Blog
In Vivo Blog
Terra Sigilatta
BBSRC/Douglas Kell
ChemBark
Realizations in Biostatistics
Chemjobber
Pharmalot
ChemSpider Blog
Pharmagossip
Med-Chemist
Organic Chem - Education & Industry
Pharma Strategy Blog
No Name No Slogan
Practical Fragments
SimBioSys
The Curious Wavefunction
Natural Product Man
Fragment Literature
Chemistry World Blog
Synthetic Nature
Chemistry Blog
Synthesizing Ideas
Business|Bytes|Genes|Molecules
Eye on FDA
Chemical Forums
Depth-First
Symyx Blog
Sceptical Chymist
Lamentations on Chemistry
Computational Organic Chemistry
Mining Drugs
Henry Rzepa


Science Blogs and News:
Bad Science
The Loom
Uncertain Principles
Fierce Biotech
Blogs for Industry
Omics! Omics!
Young Female Scientist
Notional Slurry
Nobel Intent
SciTech Daily
Science Blog
FuturePundit
Aetiology
Gene Expression (I)
Gene Expression (II)
Sciencebase
Pharyngula
Adventures in Ethics and Science
Transterrestrial Musings
Slashdot Science
Cosmic Variance
Biology News Net


Medical Blogs
DB's Medical Rants
Science-Based Medicine
GruntDoc
Respectful Insolence
Diabetes Mine


Economics and Business
Marginal Revolution
The Volokh Conspiracy
Knowledge Problem


Politics / Current Events
Virginia Postrel
Instapundit
Belmont Club
Mickey Kaus


Belles Lettres
Uncouth Reflections
Arts and Letters Daily
In the Pipeline: Don't miss Derek Lowe's excellent commentary on drug discovery and the pharma industry in general at In the Pipeline

In the Pipeline

« AstraZeneca Tell Pfizer to Buzz Off | Main | Some People at Pfizer Whose Fault This Isn't »

May 2, 2014

Allergan: "Golf-Course Deprived"

Email This Entry

Posted by Derek

Here's a good one for you. Valeant is well-known as an outfit that largely scorns R&D, and cuts it whenever they buy someone. They do mergers and acquisitions to get the fruits of someone else's research instead. You know, sort of a mini-Pfizer. (If anyone at Pfizer is offended by that comparison, they should take a longer look in the mirror).

Right now, Valeant is trying to acquire Allergan, and no doubt they're going to do to them what they've done to everyone else they've acquired. One of the wasteful things that Valeant CEO Michael Pearson has said that he wants to cut immediately is the outrageous perk of Allergan's own golf course. He's made mention of it several times, as an example of how out-of-control the spending is there. Only problem is, as Ed Silverman points out here, is that Allergan doesn't have a golf course.

At a recent luncheon with analysts, however, Pearson was pressed for further details on expenses he would slash if the Allergan deal comes to pass. According to analysts who attended, Pearson repeatedly pointed to Allergan’s golf course as an example.

“Have you been to their headquarters? Have you seen their golf course? Yeah, they have a golf course,” Pearson said, according to an investor note from BMO Capital Markets analyst David Maris, who wrote that the Valeant chief executive repeated this assertion more than once.

But the Allergan golf course will not be on the list of items to be slashed, after all. Why? Allergan, which is best known for the wrinkle fighter Botox, insists that it does not own a golf course.

“For the record, we do not have a golf course or any interest in a golf course,” an Allergan spokeswoman writes us. “We are golf-course deprived.” She adds that the drug maker received several calls after the meeting from analysts seeking to verify the information.

But hey, if there's not a golf course, Pearson will no doubt find something else to cut if the takeover does in fact go through. His McKinsey training has served him well, and his machete is sharp. The prospect has Allergan going around ringing doorbells, asking if someone else would be interested in buying them. Anyone but Valeant. I can see why.

Comments (27) + TrackBacks (0) | Category: Business and Markets


COMMENTS

1. Mind of Pearson on May 2, 2014 8:55 AM writes...

I don't get it - why should knowing things about companies you buy to rend and pillage be a functional requirement? I still get paid, right?

The way you guys talk, you'd think surgeons have to know what the parts they take out of people do. I don't get it. As long the patient weighs less than they did before they got on the table, and their insurance gets paid or their checks clear, it should be fine, no?

Permalink to Comment

2. Justin on May 2, 2014 8:59 AM writes...

No one better tell Pearson about the swimming pool on the roof then.

Permalink to Comment

3. SP on May 2, 2014 9:18 AM writes...

Aren't there securities regulators who frown on people making knowingly false public statements?

Permalink to Comment

4. Biotechtranslated on May 2, 2014 9:19 AM writes...

Valeant's entire strategy might be to acquire and slash, but hey, you have to give them credit for being honest about it.

Compare that to Pfizer who pretty much does the same, but talks and talks about it's "commitment to R&D" and how it is a leader in the "research-based pharmaceutical industry".

Permalink to Comment

5. ManDingo on May 2, 2014 9:43 AM writes...

J. Michael Pearson, is very short sighted, and I can't believe they call themselves a pharmaceutical company.... really more like a hedge fund or a micro bank that will at some point need a "bail out" from you and me. He looks like a tool that would attend Dook and I am sure he got rammed as a boy scout.

Permalink to Comment

6. Anon on May 2, 2014 9:45 AM writes...

I did a search and the only that I found was at their PA facility, which has an abandoned [no so nice...] course across the street.
4647 Saucon Creek Rd, Center Valley, PA 18034
There is however a country club about a mile away.

I feel bad for Valeant investors. You can really tell how much due diligence these folks have been doing for the M&A activities.

Permalink to Comment

7. Lexington Steele on May 2, 2014 9:46 AM writes...

Check out Valeant's mission statement below. At least they are honest and make no mention to patients who are suffering from disease or about doing any type of research or science based activity.


Valeant Pharmaceuticals International, Inc. is a diverse and decentralized pharmaceutical company that is committed to focusing on our key stakeholders while delivering consistently high performance. Our values provide the overall direction for our company, and provide us with the tools necessary to rise to any challenge by leveraging our collective hard work and effort along with our unwavering competitive spirit. Th

Permalink to Comment

8. Bausch on May 2, 2014 9:59 AM writes...

He knows exactly what to cut , but cutting the entire R&D pipeline to patch holes in their finance is not a good sales's pitch to the analysts.

Permalink to Comment

9. pgwu on May 2, 2014 10:22 AM writes...

I agree with #4. More mercenaries than missionaries in pharma mgmt nowadays. The scale from private equity/hedge funds seems larger in pharma M&A. One could argue they want to make this sector more efficient. But all the PE money into CROs recent years has not made the drug development cheaper. "This time it will be different", like they used to day.

Permalink to Comment

10. Hap on May 2, 2014 11:11 AM writes...

As long as it keeps paying people handsomely to convert useful companies to capital and wreckage, it will keep happening.

Permalink to Comment

11. mrtwoiron on May 2, 2014 11:41 AM writes...

Lewis Black could make a two - hour act out of this...especially the buzzword bingo - winning Valeant mission statement.

Permalink to Comment

12. Fat Old Man on May 2, 2014 12:26 PM writes...

@11

I've been around long enough in different places to see unsuccessful strategies like

-'focus on our core strengths' (delete therapeutic areas)
-'shots on goal' (more projects in Phase 1 means more product launches)

Can anybody add more of them?

My 2 bullet points in post 7 lead to the inescapable conclusion that consolidation in this business will continue. And after all, do we really need any new drugs? There's enough people already, we'll just keep re-approving all the old ones.

Permalink to Comment

13. Fat Old Man on May 2, 2014 12:32 PM writes...

@11 sorry I meant for thi to go to another topic

Permalink to Comment

14. annonie on May 2, 2014 12:34 PM writes...

Seems to me that Allergan should quickly buy a golf course so that Valleant has a quick win to cut the perk, feel good, and possibly protect other parts of Allergan.

Permalink to Comment

15. Anonymous on May 2, 2014 12:41 PM writes...

I was thinking about the Valeant bid for Allergan and realized that my views on this are highly conflicted.

Several years back I bought 100 shares of Allergan because my wife was so excited about their product, BOTOX. Now thanks to Valeant, I will make a quick ~$4K on top of my long-term gains in the stock. This is pretty sweet. I, like most stockholders, will sell out to the Barbarians at the Gate and not look back at all the raping and pillaging that Valeant will reap upon Allergan. Now I do not know what future inventions will be lost or the consequences for patients. I do know that Allergan did not discover the original uses for BOTOX nor did their crack commercial guys originally support development of the cosmetic uses of the drug. I am not really sure what the world will lose here when the Valeant fire-breathing dragons burn Allergan R&D to the ground.

Ha but wait a second, I just remembered my wife loves their product. BOTOX is one of the reasons she looks 15 years younger than I do and no way will she abandon it. Now I understand Valeant is going to jack-up the price for BOTOX to extract the maximum value from their Allergan buyout for Valeant management ....and stockholders, patients be-damned. Best of all for Valeant, this stick-up (the A) can happen without limits for the cosmetic stuff. That means I am screwed in so many ways. I figure in about 3 years my after-tax profits from this transaction will be gone and BOTOX money black hole will rapidly grow more massive, as I pay an ever higher price for this stuff. If I just say no, I am toast at home. Damn you short term thinking!!

Maybe be people should think about this transaction only substitute anticancer drug for BOTOX in the discussion.

My one piece of advice for Valeant is I would not try to be cute here and save any money in CMC for BOTOX as there is not a lot of safety room on this product for a CMC screw-up. The resulting litigation will make the Robin's Dalkon Shield caused bankruptcy seem like small ball.

Permalink to Comment

16. Dr Manhattan on May 2, 2014 1:16 PM writes...

#12. One of my favorites was way back in the mid 1990's at BMS. OSB- "Opportunity Seeking Blockbusters". It meant that every project had to demonstrate a clear path to being an over $1 billion/yr. drug. We would only fund blockbusters from here on in. Of course we had a bunch of McKinsey consultants in with their Magic 8-Balls to tell us which compounds would be blockbusters. Will it be a blockbuster?
"You may rely on it" "without a doubt"

Permalink to Comment

17. will on May 2, 2014 1:45 PM writes...

Allergan moved their golf facilities to China a few years ago. Everyone now shoots 12 under par

Permalink to Comment

18. MedChem3000 on May 2, 2014 2:06 PM writes...

Allergan may not have a golf course but they still have a really nice softball diamond/soccer field at their main site in Irvine, CA.It is a pretty nice perk and it is surprising that they still have it given the cost of real estate in the OC.

Permalink to Comment

19. JT on May 2, 2014 3:38 PM writes...

Fred Hassan is on Valeant's BOD. He's well versed in how to acquire and slash.

Permalink to Comment

20. pharmaobserver on May 2, 2014 6:19 PM writes...

The pharmaceutical industry hasn't "gotten itself into anything". The "industry" merely enjoyed a SHORT period of success that has come and gone.

Permalink to Comment

21. newnickname on May 3, 2014 7:51 AM writes...

Slightly off topic, but please help: Pipeline pages, Comments and "Post a Comment" are not working reliably for me and several others. I variously get: a completely blank page; a partially loaded page; a page with some Comments (from the "Comments (#)" link, I'm expecting # (eg, "32") comments but the page only loads some number smaller than # (eg, "25") comments; partial pages rarely (never?) include the "Post a Comment" box (such as I'm typing in now).

Please ask Corante ITS to fix this problem.

THANK YOU.

Permalink to Comment

22. Erebus on May 4, 2014 2:26 AM writes...

I'm experiencing the same issues mentioned in post #21.

Permalink to Comment

23. Anonymous on May 4, 2014 1:34 PM writes...

21 & 22 Snap for me. I though it must be something to do with my ipad, but clearly not...

Permalink to Comment

24. Fat Old Man on May 4, 2014 9:07 PM writes...

I agree with 21 & 22. The responder posts are frequently truncated or missing. It happens across platforms, PC or Apple, any browser I try, different wi fi systems, and several devices, some of which I have never used to post back. But at least Derek's main post is almost always available. That's the important part, not our pathetic replies.

Permalink to Comment

25. Fred the Fourth on May 4, 2014 9:36 PM writes...

21-24 & Derek: FWIW I have never seen any of those problems, using Win 7 and 8, and Firefox and Chrome.

Permalink to Comment

26. srp on May 5, 2014 7:09 PM writes...

I work in Irvine, so naturally nobody is excited about this deal, but I don't get what wonderful things Allergan has done in the R&D area that people are eager to have them do more of it. They bought up a drug developed by others whose most lucrative market was discovered by others and they ran with it. Good for them, but if they are taking a large portion of the proceeds and pouring it down a rat hole then stopping this would seem like a Good Thing.

You can't consistently criticize evil stupid McKinsey R&D management at pharmas and then cheer on their continuation.

Permalink to Comment

27. simpl on May 7, 2014 4:11 AM writes...

Responding to srp's question on Allergan R&D - you are correct that they have not done so much in the way of new molecules, with the possible exception of bimatoprost.
However, their skill in developing new and difficult indications has been around for decades.

Permalink to Comment

POST A COMMENT




Remember Me?



EMAIL THIS ENTRY TO A FRIEND

Email this entry to:

Your email address:

Message (optional):




RELATED ENTRIES
XKCD on Protein Folding
The 2014 Chemistry Nobel: Beating the Diffraction Limit
German Pharma, Or What's Left of It
Sunesis Fails with Vosaroxin
A New Way to Estimate a Compound's Chances?
Meinwald Honored
Molecular Biology Turns Into Chemistry
Speaking at Northeastern