Allergan Inc. is going all out to boost lagging sales of its weight-loss device.
The Irvine-based maker of Botox, other drugs and select medical devices will “put all our emphasis on improving (Lap-Band) reimbursement,” Chief Executive David Pyott said in an interview last week.
Lap-Band is a removable silicone band that’s inserted around a patient’s stomach. It has been a laggard in Allergan’s product lineup, with $41 million in second-quarter sales representing a 24% drop a year earlier.
The company has “thrown our whole managed-care team” into efforts to improve insurer reimbursement for Lap-Band, Pyott said.
“Great Results”
Allergan’s managed-care team “got great results” in its effort to gain coverage for Botox after it was approved for chronic-migraine headaches and neurogenic overactive bladder during the last couple of years, he said.
The unit working on Lap-Band involves about 100 employees, Pyott said.
Lap-Band surgeries cost upward of $15,000, and doctors pay about $3,000 for the device itself.
Allergan expects to see more insurers agreeing to Lap-Band surgery reimbursements starting with the next coverage year in 2013, Pyott said.
“That gives us some hope that we can start to improve this very negative (revenue) trend,” he said.
Pyott downplayed as a “local situation” a controversy involving the 1-800-GET-THIN advertising campaign for Lap-Band surgery. The regional campaign was pulled by its owners after the Food and Drug Administration said in December such marketing underplayed risks to patients.
“I think external observers always attributed much greater value of sales to 1-800-GET-THIN than it is reality,” Pyott said. “So (in) the big scheme of things, that’s just sort of a minor irritant.”
Allergan pulled sales to the company behind the advertising campaign in February but declined to say how it figured in overall Lap-Band sales.
Allergan reported its second-quarter financial results on Aug. 1, with net income climbing 19% from a year earlier to $296 million.
The company said its second-quarter profit, excluding one-time charges, came in at $330 million, 11% higher than a year earlier.
Analysts on average had expected Allergan to post a $326.7 million profit, excluding charges.
The drug maker’s second-quarter revenue totaled $1.47 billion, up 5% from a year earlier and just below Wall Street’s consensus expectation of $1.5 billion.
Allergan said that its second-quarter revenue would have been up almost 9% if not for unfavorable foreign exchange rates.
Botox saw a 10% quarterly revenue boost to $461 million.
Revenue Split
About 40% of Allergan revenue comes from sources other than insurer reimbursements.
“People were just relieved that we don’t seem to have any of the problems that lots of other companies with consumer-facing businesses [have],” Pyott said. “The Amer-ican consumer seems to be alive and kicking.”
Allergan raised the lower end of its full-year profit guidance and now expects 2012 profit of $1.279 billion to $1.291 billion. That’s up from a previous forecast of $1.273 billion to $1.291 billion.
Wall Street on average estimates Allergan’s 12-month profit to come in at $1.285 billion.
