Health

Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

Allergan PLC's golden goose might be getting tired.

Botox is Allergan's best-selling product and an essential growth driver for the company. It is notoriously tough to replicate. But at least one competitor is giving it a real go: Revance Therapeutics Inc., a Newark, California-based biotech, released promising trial data Tuesday on an injection that may last longer than Botox. 

Allergan's recent strategic choices have seemingly been made under the assumption that Botox dominance will continue for years to come. That may have left the company unprepared to deal with competition.   

Piling On
Good data for a potential Botox competitor was the last thing Allergan shareholders needed
Source: Bloomberg

Revance's medicine has a long way to go before it proves to be a genuine threat to Botox. Allergan has spent years expanding the toxin's medical and aesthetic uses. It would take time and many studies for any new competitor to catch up. Revance doesn't expect to hit the wrinkle-treatment market in the U.S. until 2020.

But the data released Tuesday certainly hurt Botox's aura of invincibility. Allergan's growth is already under pressure from declining sales of some older medicines, and its second-biggest drug Restasis will face generic competition in the near future.

A Possible Wrinkle
Botox is expected to be a significant part of Allergan's growth and revenue for years to come
Source: Bloomberg

The new challenge to Botox means it may be time to worry about how Allergan has used the $30 billion-plus windfall it received from the well-timed sale of its legacy generics business to Teva Pharmaceutical Industries Ltd. Much of that went to paying down about $14 billion in debt. But $30 billion or so in debt remains, and the company has spent a boatload on buybacks and acquisitions. 

We'll Do it Later
Allergan has found better (or at least different) uses for its cash than continuing to pay down its debt
Source: Bloomberg

The Revance news puts more pressure on Allergan's pipeline drugs and recent acquisitions to succeed -- and many of them are on the uncertain side. The company has had an unfortunate tendency recently of pushing drugs into final-stage trials based on mixed data. 

Botox's success has provided a lot of cover for such risky decisions. Without it, Allergan could be exposed.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Max Nisen in New York at mnisen@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net