A new pharma on the scene – Actavis

Actavis is a global pharmaceutical company headquartered in Dublin, Ireland. It develops and markets generic and innovative pharmaceuticals. The acquisition of Allergan (AGN) will considerably improve the company’s business profile. The new company will benefit from: a) large scale, enabling multi-billion dollars of cash flow, b) improved financial conditions to drive new drugs, c) a more diversified portfolio of product and therapeutic products, which reduces financial dependence on few block-busters, d) potential for higher profitability given the desired focus on new drugs (estimated 60% of drug sales), and e) a larger product pipeline, which diversifies the development risk.

The new company is estimated to generate 2015 sales in the region of USD 23bn, its products and therapeutics include treatment for central nervous system, eye care, dermatology, gastroenterology, and urologics. The company benefits from a few strong brand names such as Botox, Restasis, and Namenda.

The company plans to split its business into 2 distinct operations: Allergan which is the expected new corporate name, is expected to commercialize branded products, while generic products are expected to be sold under the name of Actavis.

List of selected brands held by Actavis

	Actavis	Allergan
Dermatology & Aesthetics	Doryx Cordran Tape	Botox Juvéderm Latisse
Central nervous system	Namenda Vlibryd Saphris	Botox
Eye care		Restasis Alphagan Lumigan
Women’s health & Urology	Lo Loestrin Estrace Rapaflo	Botox
Gastroenterology & Cystic fibrosis	Linzess Asacol Zenpep
Cardiovascular & Respiratory	Bystolic Rudorza Pressair Daliresp​

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Competitors:

Segment	Company	Ticker
Specialty pharma:	Endo International	ENDP
	Salix Pharmaceuticals	SLXP
	Jazz Pharmaceuticals	JAZZ
	Valeant Pharmaceuticals	VRX
Generics:	Impax Laboratories	IPXL
	Myland	MYL
	Akorn	AKRX
	Perrigo	PRGO
	Hospira, Inc	HSP
	Mallinkkrodt	MNK

 

For the financial years 2015 and 2016, Actavis is expected to generate about USD 8bn of operating cash-flow. Additionally, the company is expected to streamline some of its business and benefit from synergies (from the Forest Laboratories acquisition: USD 1bn and from the Allergan acquisition USD 2.3bn). Free cash-flow should rise from USD 5bn in 2015 to USD 8bn in 2016 (60 %). Based on excellent organic growth drivers, we rate the company with a target price of USD 370.00