Irvine drug maker Allergan Inc. got a debt rating jolt from Standard & Poor’s.
S & P; affirmed its ratings on Allergan and removed the company from its CreditWatch, where the agency placed the company with negative implications back in November.
That’s when Allergan unveiled plans to pay $3.2 billion for Santa Barbara-based Inamed Corp.
S & P;’s latest shift came after Allergan closed the Inamed buy and updated its guidance for the year.
“The ratings on Allergan reflect the company’s solid position in its specialty pharmaceutical and medical products markets, strong cash flows and modest financial risk profile,” said Arthur Wong, an S & P; credit analyst.
Wong offered this caution: “These positive factors are somewhat tempered by the possibility of increased competition to core products over the next couple of years.”
Analysts and industry observers have said that Reloxin, a botulinum toxin product that Inamed formerly held the rights to, could emerge as a competitor to Allergan’s Botox.
Allergan officials have downplayed the threat, saying Botox’s longtime hold on the market will see the drug through any competition.
S & P; also took a favorable position on the Inamed deal, saying it “complements Allergan’s Botox cosmetic presence.”
The agency called Inamed, whose products include breast implants and dermal fillers, “a well-entrenched provider for the plastic, reconstructive and aesthetic surgery markets.”
Regulatory requirements for breast implants in the U.S. and Europe “provide significant barriers to competitor entry in the market, and the company’s dedicated sales force also poses a competitive advantage,” S & P; said.
Allergan also is gaining a “rapidly expanding health unit” through Inamed’s Lap-Band, a minimally invasive device for weight loss surgery.
Hospital Demand
The aging of baby boomers,an oft-cited reason for the heavy increase in hospital construction,isn’t expected to play that big of a role in pushing up demand for care during the next decade, according to the Center for Studying Health System Change.
Orange County is one of 12 areas studied by the center, a nonprofit financed by the Robert Wood Johnson Foundation.
Center researchers estimate that population aging will up use of hospital services by 7.6% from 2005 and 2015, compared with a projected overall 65% increase in use during the same period.
Researchers said they believe that population growth and medical technology advances would be far more important in forecasting community needs for added hospital space.
“The findings are a cautionary tale for hospital administrators to look before they leap into large-scale expansions based on the notion that an aging population will drive big increases in demand for inpatient care,” said Paul Ginsburg, the center’s director.
Aging does stand to have an important impact on healthcare spending, the center said. But its magnitude would be dwarfed by the impact of technology advances and other factors.
In OC and the rest of California, several large hospital expansions are under way, driven by expected population growth and a need to meet the state’s earthquake safety laws.
Sybron Refinances, Cuts Debt
Sybron Dental Specialties Inc., the Newport Beach-based dental products maker, refinanced its credit line with one that had a lower interest rate and higher limit.
The dental products maker also said the deal allowed it to borrow up to $250 million, with an “accordion feature” that allows for an added $400 million worth of borrowing at the London Interbank offered rate, plus 0.63%.
Sybron’s old credit line allowed borrowing up to $150 million at an interest rate of 1.75% plus the London Interbank rate.
Part of the new credit line is set to go toward paying down $35.8 million in old debt. Sybron plans to take a charge of $1.9 million in the March quarter for the refinancing.
The maker of orthodontic and other dentistry products also plans to use the credit for potential acquisitions and expansion.
Bits and Pieces:
The Hospital Association of Southern California, which has an office in Garden Grove, is among the participants in a $5 million grant and scholarship campaign to address what the California Hospital Association calls “the critical shortage of clinical laboratory workers” in the state. The association estimates the state will need nearly 700 clinical laboratory scientists per year for the next five years, while existing educational programs are expected to only graduate 225 students a year Feinerman Vision Center, Newport Beach, is participating in clinical trials for surgical spacing procedure, a technique that’s intended to help people regain short-range vision losses stemming from presbyopia, a condition that affects nearly everyone 40 years and older.
