First quarter net income dropped to $45 million, or 15 cents a share, but excluding items it was 55 cents a share, beating by two cents analyst estimates, according to Bloomberg. First-quarter revenue fell 6.4 percent to $1.01 billion, matching analysts' estimates. Sales of Botox, which accounted for almost a third of Allergan's revenue in 2008, or $1.3 billion, dropped 18.2 percent to $297.3 million.
Allergan will fire about five percent of its workforce, as the recession isn't the only wrinkle it finds Botox can't smooth as it's hit with harsher competition and black-box label warnings.
Allergan will have to deal now with the first real competition for Botox (Myobloc from Solstice Neurosciences has been a much smaller rival) as the FDA approved this week Botox's first major competitor, Dysport, also an injectable drug derived from the paralytic agent botulinum toxin, from Ipsen SA and Medicis Pharmaceutical Corp. (MRX).
With the only product on the market, the company has been able to raise prices for Botox annually, but Dysport may be priced 15 percent lower than Botox in Europe, and has the potential to capture a third of the cosmetic market in the United States. Medicis said it plans to market Dysport for frown lines within 60 days.
With the huge market Botox has, it's surprising a competitor didn't turn up sooner. The American Society for Aesthetic Plastic Surgery estimates that -- despite warnings -- almost 2.5 million Americans got Botox injections last year, the most popular U.S. cosmetic procedure.
Seems the warnings had merit though. Public Citizen petitioned the FDA for the warnings last year as it had received reports of 225 serious health problems and 17 deaths connected to the injections. It's not surprising then that the FDA finally issued the warning order, a day after it approved Dysport.
The three affected drugs now must carry warning labels with bold face on the box -- black-box warning -- explaining that the material can cause botulism by spreading from the injection site, thus potentially paralyzing or weakening the muscles used for breathing and swallowing, which could be fatal.
The FDA said the problems had occurred mainly in patients who received overdoses of the drug for unapproved treatments such as children being treated for cerebral palsy-associated limb spasticity. It added it has not seen serious problems with approved uses to treat neurological disorders such as crossed eyes, eyelid spasms, severe underarm sweating, and cervical dystonia, a neck-twisting disorder, at approved doses. Moreover, approved cosmetic uses require lower doses than the other uses of the drug.
Allergan said it will cooperate, adding that "Botox has been marketed in the United States for nearly 20 years, its safety and efficacy profile are well understood, and reports of suspected distant spread have been rare."
Allergan shares lost 6.15 percent of their value today, not surprising after the triple whammy the company got this week.