Allergan’s Wrinkle-Busting Botox to Grow From Therapeutic Uses

Allergan Inc.’s Botox, the $1.4 billion drug known for smoothing facial wrinkles, will derive a dominating share of its revenue this year from therapeutic uses, such as chronic migraines, for the first time since 2006, Chief Executive Officer David Pyott said.

Revenue in the last few years has been roughly split between therapeutic and cosmetic uses, Pyott said today in an interview in New York. The company last week forecast 2011 Botox sales of $1.5 billion to $1.55 billion.

“It has taken 20 years to get to $700 million on the therapeutic side,” Pyott said today, referring to half of Botox’s 2010 revenue. With the October U.S. regulatory approval of the medicine for chronic migraine headaches, sales from therapeutic uses will surge ahead of those from cosmetics this year, he said, citing some analysts’ estimates of as much as $800 million in peak revenue from the migraine indication alone.

Botox, a purified form of the poison botulinum, has been used in the U.S. since 2002 as an injection to smooth frown lines between the eyebrows of people ages 18 to 65. It was initially approved for therapeutic uses in 1989. The drug has been cleared for uses in blepharospasm, a condition characterized by uncontrollable blinking; the neurological disorder cervical dystonia; hyperhidrosis, or severe sweating; strabismus, a visual defect in which the eyes don’t align properly; and upper limb spasticity.

Surging Uses

“There was a five- to six-year growth spurt when cosmetic caught up to therapeutic,” Corey Davis, an analyst with Jefferies & Co. in New York, said in a telephone interview today. “The fact that therapeutic is probably going to surge again relative to cosmetic is driven by indications: spasticity last year, now an indication for migraine, and an upcoming indication for overactive bladder.”

Allergan gained 31 cents to $81.37 at 4 p.m. in New York Stock Exchange composite trading. The shares increased 18 percent this year.

The economic decline caused some customers to delay or skip elective cosmetic procedures, yielding a dip in that business’s growth, while use of the drug for therapeutic reasons continued to increase, said Caroline Van Hove, a spokeswoman for the Irvine, California-based company. Pyott said today the aesthetic market is recovering.

Davis, who recommends holding Allergan shares and doesn’t own any, estimated Botox may generate as much as $300 million in peak U.S. sales from use against migraines within six to eight years, and about $200 million in peak revenue from a potential indication in overactive bladder. Those numbers may double from uses outside the U.S., he said.

Growth Driver

“The future growth of Botox is going to be completely driven by therapeutic use,” Davis said. “There are no other formal cosmetic indications left, but there are plenty of new therapeutic indications left.”

Allergan is also testing Botox in juvenile cerebral palsy and a condition known as benign prostatic hyperplasia, in which the prostate becomes enlarged, and is developing a related molecule for use against pain, according to its website.

“Any disorder that involves a muscle and a nerve is a hypothetical candidate for Botox,” Davis said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE