Allergan plc, a specialty pharmaceutical company, develops, manufactures, markets, and distributes medical aesthetics, biosimilar, and over-the-counter pharmaceutical products worldwide. It operates through US Specialized Therapeutics, US General Medicine, and International segments. The company offers a portfolio of products that provide treatment for the central nervous system, gastroenterology, women's health and urology, ophthalmology, neurosciences, medical aesthetics, dermatology, plastic surgery, liver disease, inflammation, metabolic syndromes, and fibrosis, as well as Alzheimer's disease. It is also involved in developing ocular implants that reduce intraocular pressure associated with glaucoma; medical devices for the correction of prominent ears; and intranasal neurostimulation devices, as well as other dry eye products. In addition, the company distributes generic and branded pharmaceutical products primarily to independent and chain pharmacies, nursing homes, mail order pharmacies, hospitals, clinics, and physician offices. Further, it develops a portfolio of breast implants and tissue expanders; and RM-131 (relamorelin), a peptide ghrelin agonist for the treatment of diabetic gastroparesis. The company has licensing agreement with Assembly Biosciences, Inc.; Mimetogen Pharmaceuticals, Inc.; Almirall, S.A; Naurex, Inc.; and Merck & Co. The company was formerly known as Actavis plc and changed its name to Allergan plc in June 2015. Allergan plc was founded in 1983 and is headquartered in Dublin, Ireland.
Business Analysis of Allergan
The Life Sciences Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how Allergan compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by Allergan to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of Allergan with an interactive chart.
- Revenue Growth: Allergan reported a revenue growth of 14.8% year-on-year during 2016. Pharmaceuticals Industry grew at 7.7% in the same period
- COGS share of Revenues: As a percentage of revenue, Allergan spent 12.8% of its total revenues on COGS. Pharmaceuticals industry average (COGS share of revenue) in the same period was 31.7%
- R&D share of Revenues: As a percentage of revenue, Allergan spent 17.7% of its total revenues on R&D. Pharmaceuticals industry average R&D spending in the same period was 15.6%
- SG&A share of Revenues: As a percentage of revenue, Allergan spent 32.5% of its total revenues on Sales, Marketing, and General Administration (SG&A). Pharmaceuticals industry average SG&A spending in the same period was 27.9%
- Inventory share of Revenues: As a percentage of revenue, Allergan spent 4.9% of its total revenues on Inventories. Pharmaceuticals industry average Inventory spending in the same period was 13.1%
- Accounts Payable share of Revenues: As a percentage of revenue, Allergan invested 34.4% of its total revenues on Accounts Payable (A/P) Pharmaceuticals industry average Accounts Payable investment in the same period was 12.4%
- Accounts Receivable share of Revenues: As a percentage of revenue, Allergan invested 17.4% of its total revenues on Accounts Receivable (A/R). Pharmaceuticals industry average Accounts Receivable investment in the same period was 19.0%
- PP&E share of Revenues: As a percentage of revenue, Allergan invested 11.1% of its total revenues on Property, Plants, and Equipments (PP&E). Pharmaceuticals industry average PPE investment in the same period was 26.2%
- Intangibles share of Revenues: As a percentage of revenue, Allergan invested 747.9% of its total revenues on Intangibles. Pharmaceuticals industry average Intangibles investment in the same period was 161.8%
- Net Margins: Allergan Net Margins in the year 2016 were 102.8%. Pharmaceuticals industry average Net Margins in the same period were 15.8%
Sector and Industry Association of Allergan
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries. For high-level analysis purposes, related/similar sectors are grouped into sector groups.
Allergan is associated with Healthcare Sector Group, Life Sciences Sector, and Pharmaceuticals Industry.
Life Sciences sector is comprised of the following industries: Pharmaceuticals; Medical Devices; Biotechnology; Diagnostics & Scientific Instruments. The definitions for each of the industries is as follows:
- Pharmaceuticals industry includes companies that discover, develop, manufacture, and market medicines licensed for use as medications. In general these companies offer pharmaceutical products that can be described as prescription or over-the-counter medicines. Many Pharmaceutical companies also offer a diverse portfolio of animal health products, services and solutions. Many diversified pharmaceutical companies operate in more than two operating segments like consumer health products, medical devices and pharmaceutical.
- Medical Devices industry includes manufacturers and distributors of medical equipments and medical supplies. Medical equipments include large scale capital equipmets such as X-Ray machines and MRI scanners and other nondisposable medical devices like stents and pacemakers. Medical supplies include makers of contact lenses, eyeglass lenses, bandages and other disposable products.
- Biotechnology industry includes Biotechnology product companies, subscription companies, and service companies. Biotechnology product companies offer pharmaceutical drug products that are manufactured in, extracted from, or semi synthesized from biological sources. Subscription-based companies develop genome databases, which can be used to develop medicinal drugs. Service companies offer solutions based on a common technology or generic tool of other large pharmaceutical or biopharmaceutical companies.
- Diagnostics & Scientific Instruments industry includes companies that provide testing products, diagnostic reagents, instruments and diagnostic services to aid in the detection and treatment of a wide range of diseases. It also includes molecular diagnostic and genetic testing companies that develop, manufacture, market and provide diagnostic tests, diagnostic systems and related products and services. Also included are companies that manufacture and market analytical instruments, equipment, reagents and consumables, software and services for research, manufacturing, analysis, discovery and diagnostics.
Industry Ranking of Allergan
With $14.6 billion revenues, Allergan ranked number 7 of all the companies in the US Pharmaceuticals industry. There were a total of 49 public companies in the US Pharmaceuticals industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Pharmaceuticals industry by revenues during 2016 were:
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.