Allergan to restructure, cutting 1,500 employees
As a result of a review of its operations and processes, Allergan will execute a restructuring it estimates will deliver annual pre-tax savings of approximately $475 million in calendar year 2015. Allergan will focus resources on the highest value opportunities, streamline its organizational structure, simplify processes and interfaces, optimize site footprints and enhancie strategic sourcing of goods and services.
As part of the restructuring, Allergan will reduce its workforce by approximately 1,500 employees, or 13% of its current global headcount, and eliminate an additional approximately 250 vacant positions. Approximately 94% of all customer-facing personnel are unaffected by the restructuring. All pharmaceutical R&D programs in the clinic will continue.
For the quarter ended June 30, Allergan reported $1.37 diluted earnings per share, compared to $1.17 for the year-ago quarter. Allergan reported $1,827.3 million in total product net sales, up 15.9% from the year-ago quarter. For the full year of 2014, Allergan expects total product net sales between $6,900 million and $7,050 million.
“With continuing strong momentum, Allergan recorded the strongest increase in absolute dollar sales in any quarter in our history, and again delivered sales and earnings per share growth above the high end of our expectations," said David E.I. Pyott, Allergan's chairman of the board and CEO. "We are pleased with the progression of key clinical programs into phase III, as well as the recent FDA approval of OZURDEX for diabetic macular edema."
Allergan's strategic plan (2014 through 2019) is expected to deliver a compounded annual growth rate of greater than 20% EPS growth. It currently estimates it will incur total non-recurring pre-tax charges of between $375 million and $425 million in connection with the restructuring and other costs.
Regarding Allergan’s unsolicited proposal from Valeant, on June 23 Allergan's board issued its recommendation that Allergan stockholders reject the offer and not tender their shares. The board concluded the offer to be grossly inadequate, substantially undervaluing Allergan, creating significant risks and uncertainties for Allergan stockholders and not in the best interests of Allergan and its stockholders.