Irvine-based Allergan Inc., maker of Botox and various other drugs and medical cosmetic products, is getting stepped-up competition in its medical aesthetics and dermatology lines.
Scottsdale, Ariz.-based Medicis Pharmaceutical Corp. recently agreed to be acquired for $2.6 billion in cash by Canadian drug maker Valeant Pharmaceuticals International Inc., which has roots in Orange County. Some believe a concerted effort by Valeant could turn Medicis into a powerhouse in the dermatology and aesthetics industries.
Medicis’ products include the Restylane lower-face facial filler line—which competes with Allergan’s Juvéderm—and botulinum toxin Dysport, which has made some inroads against Allergan’s longtime flagship Botox. It also offers Solodyn, an acne treatment that competes against Allergan’s Tazorac.
Dermatology sales top $12 billion annually, dominated by specialty drug makers rather than big pharmaceutical companies. The field is attractive to companies, because it’s largely cash-pay, which keeps it insulated from the threat of Medicare and Medicaid reimbursement cuts by lawmakers.
Buying Medicis gives Valeant what some have characterized as a mirror version of Allergan’s portfolio, with interests in eye care, facial aesthetics, dermatology and neurosciences.
“I do believe Allergan is a fierce competitor to Medicis, and I do think that competing with the likes of Allergan and Johnson & Johnson in the high-touch world of aesthetics could be a challenge for Valeant management,” analyst Stephen Simpson said in an article published on the Investopedia website.
That assumes Valeant management was adamant about holding on to the aesthetic business, he added.
“Management may well be willing to think about selling the business now or in the future if it seems to fall outside their skill set,” Simpson said.
Valeant doesn’t expect competition for its Medicis offer, and the number of potential bidders appears to be limited.
Corey Davis, an analyst with Stamford, Conn.-based Jefferies & Co., said in a research note that he didn’t think Allergan would be interested in making a bid for Medicis, “given the significant overlap in products.”
But analyst David Amsellem of Piper Jaffray LLC in Minneapolis wrote that he wouldn’t be shocked if Medicis gets an offer from another party.
Amsellem said the “total absence” of Medicis’ management on the call announcing the deal was “odd in our view, particularly in the context of a friendly transaction.”
Valeant has been growing through acquisitions in recent years. What’s now known as Valeant had its roots in ICN Pharmaceuticals Inc., a drug maker founded in the early 1960s by former Serbian prime minister Milan Panic. The company changed its name in 2003, was bought by Canada’s Biovail Corp. in 2010 yet retained the Valeant name and has been winding down its local operations.
Surgical Device
Edwards Lifesciences Corp., the Irvine heart valve maker, introduced a device for use during minimally invasive heart surgery.
ThruPort ProPlege is designed for use in patients who are undergoing cardiopulmonary bypass during heart surgery. It is known as a cardioplegia device, which means intentional and temporary cessation of heart activity during surgery.
Edwards said that the device helps to facilitate a minimal-incision surgical approach while protecting a patient’s heart. The company said ThruPort ProPlege also enables gentle occlusion of the coronary sinus and monitors its pressure.
Government Contract
Insight Imaging Inc., a medical imaging provider currently based in Lake Forest, said it received a contract for mobile magnetic resonance imaging systems from the General Services Administration. The contract’s terms and value were not disclosed.
Black Diamond Capital Management LLC, an $11 billion private equity firm, said in June it would boost its investment in Insight, something that laid the groundwork for Insight to buy Toronto-based Onex Corp.’s controlling interest in St. Louis Park, Minn.-based Center for Diagnostic Imaging Inc.
CDI has said that the combined company’s management team “intends to maintain a presence at Insight’s California office for the foreseeable future” but hasn’t offered details.
Doctors’ Group
HealthCare Partners LLC, a Torrance medical group, has agreed to buy two Irvine-based independent practice associations and an affiliated medical service organization for an undisclosed price.
Arta Health Network and Arta Western Medical Group and Western Medical Management serve more than 76,000 patients through a network of 800 primary care and specialist doctors.
HealthCare Partners is no stranger to Orange County. It bought Costa Mesa-based Talbert Medical Group in 2010. It also has an independent practice network that together with Talbert serves more than 61,000 patients.
Bits and Pieces
Epinex Diagnostics, a Tustin developer of diagnostic tests, said it received a patent for its diabetes monitor from the Canadian Intellectual Property Office. Combat Critical Care in Irvine introduced the O2Pak, a device that can be used to deliver oxygen in what it called “hostile and inaccessible environments directly at the point of injury.” Combat is a subsidiary of Pacific Precision Products, which is also in Irvine.
