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Allergan to spin off optical, medical device business
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NEW YORK — Allergan will split its pharmaceutical and “optical medical device” businesses into two independent companies by the middle of the year, company executives announced today.
The new entity, Advanced Medical Optics Inc. (AMO), will be established as an independent, publicly traded company focused on ophthalmic surgery and contact lens care. James V. Mazzo, currently Allergan's corporate vice president, president of the company’s Europe/Africa/Middle East region and global head of the ophthalmic surgical product line, will become president and CEO of the new spin-off.
"For Allergan, this transaction fulfills our strategic vision to become a 'pure play' specialty pharmaceutical company," said David Pyott, chairman, president and CEO of Allergan. Mr. Pyott is expected to remain in his position after the spin-off.
Mr. Pyott said during the past 2 years "it has become increasingly apparent" that the two businesses were "fundamentally different." Because of the changing needs of the eye care practitioner, running the two businesses under one entity no longer made sense, he said.
"Allergan remains absolutely committed to eye care pharmaceuticals and is straight on course to capture the No. 1 position in the world in ophthalmic pharmaceuticals. However, the new Allergan will be much more than ophthalmology alone," Mr. Pyott said, pointing to the company's neurology and dermatology products.
Once the transaction is complete, Allergan will employ about 5,200 people and have its primary manufacturing facilities in Waco, Texas; Westport, Ireland and Guarulhos, Brazil.
AMO will be based in Orange County, Calif. and will employ about 2,100 people, Mr. Pyott said. AMO "will be a highly viable enterprise as the world's second largest ophthalmic surgical company in the markets in which it competes and the world's second largest contact lens care company. AMO is currently the world's fastest growing company in the sale of foldable intraocular lenses for cataracts," according to a company news release.
Allergan executives estimate one-time costs associated with the transaction to be in the range of $150 million to $200 million. During a conference call discussing Allergan's year-end results, executives noted sales for 2000 were about $990 million and sales for 2001 were about $1.14 billion, adjusted for the impact of extracting the medical device business. "Given the high organic growth rates of Allergan's specialty pharmaceuticals businesses, it is currently anticipated that the company's sales should return to pre-spin levels in approximately 2 years," Mr. Pyott said.