Actavis, which is buying Botox-maker Allergan for $66 billion in one of the biggest acquisitions announced so far this year, plans to stay committed to developing new products.
CEO Brent Saunders said Monday that the combined company will have more than two dozen products in late-stage clinical testing, which is usually the last and most expensive development phase, and it will work to support research.
“It is the lifeblood of our company,” he told analysts.
Actavis and the company it outbid for Allergan, Valeant Pharmaceuticals, both have grown rapidly in recent years through multibillion-dollar acquisitions of other drugmakers. But experts say developing new products internally is still the preferred method for revenue growth if — and this is a huge “if” — enough of that research is successful.
“It’s also really risky,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business who follows the pharmaceutical industry.
Allergan spent months fending off overtures from Valeant, in part because it thought the Canadian drugmaker would gut its research funding. The Irvine, Calif., company also complained that Valeant’s $53 billion bid was too low. Valeant Pharmaceuticals International Inc. partnered with the hedge fund and Allergan shareholder Pershing Square Capital Management on the bid.
