No acquisitions just to cut tax

Allergan chief executive David Pyott said he probably won’t follow other drugmakers in making an acquisition in Ireland as a way to lower the company’s corporate taxes.

The Irvine, California-based maker of the Botox wrinkle treatment, has a manufacturing plant in Ireland, which already is adding some tax advantages, Mr Pyott said. Additionally, acquisition opportunities in that country are dwindling in the wake of moves by other companies, he said.

Investors have been pressuring Mr Pyott to seek such a deal, according to David Maris, senior research analyst at BMO Capital Markets. It follows acquisitions last year of Irish drugmaker Elan by Perrigo, the largest US maker of generic over-the-counter medicines, and Dublin-based Warner Chilcott last year by Actavis, which relocated to Ireland through the deal.

“This is the latest fashion in financial engineering, until the roof comes off and someone changes the rules,” Mr Pyott said in an interview at the JPMorgan Chase & Co healthcare conference in San Francisco. “I am not swayed by that.”

Allergan is open to more acquisitions and is looking for companies with experimental products that have growth potential, including new speciality areas, according to Mr Pyott.

“We always want to buy technology,” he said.

It is “extremely likely” that Allergan will make an acquisition this year, Mr Maris said. He sees the potential for Allergan to be interested in European allergy companies, such as

Denmark- based ALK-Abello A/S or French drugmaker Stallergenes SA, as both companies are not in a crowded market.

Allergan also may want to go into central nervous system areas like addiction, Mr Maris wrote in a note to clients.

While Mr Maris said he doesn’t see a deal in Ireland as “imperative” for Allergan, some shareholders “really want them to do it,” he said.

Allergan is already paying less than the average US corporate tax by having intellectual property and manufacturing in Ireland, he said.

However, Mr Pyott said “there is nothing left to buy”, following the Warner Chilcott and Elan deals.

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