Aisha Al-Muslim and
Jonathan D. Rockoff
Allergan PLC plans to lay off more than 1,000 workers as the drugmaker works to restructure its business ahead of sales declines expected for several key products, including blockbuster dry-eye drug Restasis.
Allergan, which has about 18,000 employees world-wide, said Wednesday in a regulatory filing that the job cuts will affect employees in its commercial operations and other functions. It also plans to eliminate about 400 open positions. Allergan didn’t specify the geographic regions where it planned to reduce employment.
The company expects the job cuts and other cost-savings measures to reduce operating expenses by between $300 million and $400 million this year. It will record the majority of an estimated $125 million in restructuring costs in the just-ended quarter.
Allergan, which is based in Dublin, said the layoffs are part of efforts to meet 2018 earnings goals. Leerink Partners said in a note to investors that the cuts “strongly suggest” Allergan will be able to meet its earnings forecast of no less than $15 a share if a generic Restasis launches this month.
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Shares in Allergan, which shuffled between gains and losses Wednesday, closed down 0.1% to $170.14.
During an earnings call with analysts in November, Chief Executive Brent Saunders said the company would work to reduce costs rapidly to shield it from potential revenue declines.
The company has warned that the loss of exclusivity could hurt sales for Restasis, as well as menopausal drug Estrace and Alzheimer’s treatment Namenda, among others.
Allergan had been taking various steps to shield Restasis from competition, notably selling its patents to an Indian tribe in New York state to avoid a U.S. Patent and Trademark Office hearing on the validity of the drug’s patents.
The company had also been trying to protect Restasis patents in federal court. Yet in October, a U.S. District Court ruled that four patents for Restasis were invalid, potentially opening the door for generic competition. Allergan has appealed the decision.
Allergan recorded a $3.2 billion impairment in its third quarter related to Restasis, a treatment which generated $1 billion of U.S. revenue in the first nine months of 2017.
Mylan NV said last week it received U.S. Food and Drug Administration approval to sell a generic version of Estrace, while Teva Pharmaceutical Industries Ltd. recently launched the sale of the similar product in the U.S. Estrace generated $276.4 million of sales for Allergan in the first nine months of last year.
Write to Aisha Al-Muslim at email@example.com and Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com