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Ingram Claims Place in Line at Allergan

Pyott: “gradually preparing for next generation of leadership”

Irvine-based drug maker Allergan Inc. is developing a leadership bench, casting an eye toward a future beyond long-serving Chief Executive David Pyott’s tenure.

The maker of Botox and other drugs accelerated the process in late June when it promoted veteran executive Douglas Ingram to president.

“Clearly, this is—over the long term—gradually preparing the next generation of leadership of the company,” Pyott told the Business Journal last week. “He has no guarantee of being the next CEO—that never is that easy. He’s certainly in a good spot now.”

Pyott, 59, emphasized the long-term nature of Ingram’s tryout.

“I’ve been doing this job for (15) years now, and I’m not going anywhere soon, but gradually, you know, you’ve got to keep bringing people up,” said Pyott, who held the president’s post until Ingram’s promotion.

Ingram, an attorney, joined Allergan in 1996 and has served in various positions, including general counsel, corporate secretary and president of its Europe, Africa and Middle East region. The chief executive said Ingram had worked in several positions at headquarters when Pyott “banished him to Europe,” where he oversaw operations until returning to Irvine with his promotion.

“That was really good. He’s discovered that Irvine looks very different when you’re 6,000 miles away,” Pyott said of the stint in Europe, signifying that the distance gave Ingram valuable perspective on the entire company.

Ingram predates Pyott at Allergan—the chief executive came on board in 1998 and grew it from roughly $700 million in sales to more than $5 billion today and a recent market value of more than $27 billion, making it OC’s most valuable public company.

“In the 63 years Allergan’s been around, we’ve only had three CEOs,” Pyott said. “So clearly, whoever the next person is shouldn’t be the CEO for only two years.”

Pyott also discussed Allergan’s decision to bring on board as a consultant Jonah Shacknai, who founded and ran previous Allergan competitor Medicis Pharmaceutical Corp. Medicis was based in Scottsdale, Ariz., and was acquired for $2.6 billion late last year by Montreal-based drug maker Valeant Pharmaceuticals International Inc., which has OC roots.

Pyott said he has known Shacknai for years and “had enormous respect for his customer relationships.”

Allergan’s decision to bring Shacknai on and his subsequent appearance in the company’s booth at the American Academy of Dermatology meeting earlier this year in Miami Beach was characterized as “surreal” by doctors, salespeople and other companies, according to analyst Seamus Fernandez of Boston-based investment bank Leerink Swann LLC.

“He had no noncompete because he was the company founder,” Pyott said. “He never signed one of those things.”

Pyott brushed off any suggestion that Shacknai would be in the mix for the chief executive’s post at Allergan in the future.

“My read of him is that he’s already a very wealthy, independent person, and having been [Medicis’] CEO for well over 20 years, I’m not sure that’s the gig he wants to do again,” he said.

News of Ingram’s appointment as president comes shortly after market speculation surfaced about Allergan’s future.

The company has seen its shares drop 22% since mid-April, a skein that started unraveling with news of a delay on approval for a migraine drug candidate and that was pushed along more recently by word of looming generic competition for its nearly $900 million Restasis dry-eye drug.

Merck & Co. of Whitehouse Station, N.J.; New Brunswick, N.J.-based Johnson & Johnson; U.K.-based GlaxoSmithKline PLC and Nestlé SA of Switzerland have all been mentioned as potential bidders in a speculative field that has broadened as Allergan’s shares have dropped.

Pyott discussed Ingram’s promotion and Shacknai’s arrival after Allergan posted second-quarter financial results that exceeded analysts’ forecasts.

Allergan posted a $360 million profit in the quarter, up 22% from a year ago and surpassing Wall Street consensus of $355.2 million.

Sales were up 11% to $1.58 billion, slightly more than analysts’ estimates of $1.56 billion. Botox sales grew 11% to $513 million, while eye care sales, Allergan’s largest segment, rose 8% to $722 million.

Allergan also raised the lower end of its full-year profit forecast.

The company could see a 2013 profit of between $1.42 billion and $1.43 billion, up from a previous range of $1.42 billion to $1.43 billion.

Wall Street is looking for it to have a full-year profit of $1.43 billion.

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