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Allergan's profit falls on promotional costs

February 01, 2007|From Bloomberg News

Allergan Inc., maker of the wrinkle smoother Botox, said fourth-quarter profit fell 2.4% on spending to promote new products including breast implants and a skin-filling gel.

Allergan's net income fell to $136.8 million, or 89 cents a share, from $140.1 million, or $1.03, a year earlier, the Irvine-based company said. Fourth-quarter sales rose 38% to $829.1 million.

Profit, excluding certain costs, matched the $1.02 average estimate of analysts in a Bloomberg survey.

Chief Executive David Pyott invested in promotions for anti-wrinkle skin filler Juvederm, which won regulatory approval in September, and for silicone breast implants, cleared for U.S. sale in November. For 14 years, the marketing of silicone implants was restricted.

"Our pickup may be slower as things convert from saline to silicone," Pyott told investors in a conference call. The company expects to capture 40% to 45% of the revived market for silicone implants, he said.

Allergan shares rose 84 cents to $116.71. The stock is little changed from 12 months ago.

"Aesthetics is going to drive the bulk of the company's growth for a while," Jose Haresco, a Merriman Curhan Ford & Co. analyst in San Francisco, said in an interview last week. "Their long-term growth patterns are very solid."

Pharmaceutical sales, including Botox, climbed 18% to $689.2 million, the company said. Eye-care drug sales increased 13% to $386.1 million.

Sales of Botox, Allergan's biggest product, jumped 27% from a year earlier to $273.1 million, the company said. Botox is the refined botulinum toxin used to smooth facial wrinkles and treat muscle-control disorders. The company is testing the drug for overactive bladder and severe headaches.

The company will begin a new consumer advertising campaign for Botox next month, Pyott said. Botox sales for 2007 may rise to $1.10 billion to $1.15 billion from $982 million last year, the company said.

Growth in the company's eye-care products is stable, Merriman analyst Haresco said. Allergan has been broadening the line, which includes the dry-eye treatment Restasis and the glaucoma medicine Lumigan.

Combigan, another Allergan treatment for glaucoma, may be approved in the U.S. in the second quarter, said Marc Goodman, a New York-based analyst with Credit Suisse, in a Jan. 10 note to investors.

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