Allergan expects its recently completed acquisition of Inamed to add $355 mil. to $395 mil. in sales revenue this year.

Inamed's controversial silicone breast implants - the subject of ongoing safety disputes - will likely contribute to the 2006 bottom line, Allergan CEO David Pyott indicated during a March 27 call to discuss the $3.2 bil. Inamed acquisition, which closed in late March (¹ 'The Gray Sheet' March 27, 2006, In Brief).

Allergan has budgeted FDA approval and a subsequent U.S. launch of the silicone implants into its 2006 sales projections.

"Regarding breast aesthetics, we have assumed the approval of silicone breast implants in the U.S. and Canada, but have taken what we believe is a very conservative assumption regarding timing of the first sales," Pyott said.

The devices were given "approvable" status by FDA in September and now await final approval. CIBC World Markets analyst John Calcagnini predicts that silicone breast implants from both Mentor and Inamed will be approved by the end of June.

Pyott noted that Allergan is working with Inamed to "fulfill the requirements of our approvable letter for the [implant]" (² Also see "Inamed Receives Silicone Breast Implant “Approvable” Letter From FDA" - Medtech Insight, 26 September, 2005., p. 17).

Allergan predicts that Inamed's breast implant products, including both silicone and saline versions, will add $180 mil. to $200 mil. to revenue through December, a 5% to 16% rise over the final nine months of 2005.

Allergan also expects Inamed's other segments to perform well in 2006. Inamed's Lap-Band obesity surgery product, the only device approved in the U.S. for adjustable gastric banding, is expected to generate $130 mil. to $140 mil. in sales for the remainder of 2006, an increase of at least 28% over the final nine months of 2005.

According to Inamed, Lap-Band brought in $131 mil. in 2005, up nearly 50% over 2004 thanks to improved coverage by private payors. The product should get an additional boost from CMS' final February decision to provide national coverage for adjustable gastric banding for Medicare patients of all ages who meet certain obesity-related criteria ³ Also see "Seniors Covered In New Medicare Policy For Bariatric Surgery" - Medtech Insight, 27 February, 2006., p. 9).

While Pyott called Lap-Band a "great opportunity," he said Allergan is unlikely to boost the product's sales force because it wouldn't result in "a lot of money in a company with our kind of overall revenue." Under Allergan, Lap-Band's contribution to overall income will drop from 30% - its share at Inamed - to less than 5%, as it becomes a smaller piece of a much larger pie.

Though Inamed's facial aesthetics division is less than half the size of the Lap-Band division, Allergan hopes to exploit the sales force's ability to sell both Inamed facial products as well as Allergan's Botox botulinum toxin type A wrinkle treatment product.

Pyott predicted that after the integration, the division would have "more than double the size of the sales force of Medicis," a key rival, along with Mentor, in the aesthetics market.

Pyott noted, however, that Allergan does not expect any income from Inamed's Juvederm dermal filler in 2006. Though the final part of the PMA submission was completed in December 2005 and Allergan has previously predicted approval in "late 2006," Pyott said Allergan's sales projections "assumed no contribution from Juvederm in 2006."

Total Allergan sales in 2006 are expected to run between $2.8 bil. and $2.9 bil., up at least 20% over 2005, according to the firm. Most of the projected change reflects the company's strong pharmaceutical sales.

Inamed did not file first-quarter results due to the then-pending Allergan deal. Using the previous quarter's data, however, it appears that Allergan's predictions put Inamed on track to generate $457 mil. to $510 mil. for the year, a 5% to 14% increase over 2005.

Pyott noted that most Inamed employees would retain their positions, although the firm has terminated finance personnel and plans some cuts in other areas. "Areas like sales and marketing and R&D are pretty unaffected by all these integration efforts," Pyott said.

Allergan has budgeted 100 days to integrate "key business processes" and to plan the remainder of the integration.

Allergan Details Revenue Expectations From Newly Acquired Inamed

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