Irvine drug maker Allergan Inc.’s shares were downgraded Friday by a Morgan Stanley analyst, citing potential competition from Johnson & Johnson and Medicis Pharmaceutical Corp. for its wrinkle-reducer Botox and Lap-Band, an obesity fighter.
Analyst Louise Chen downgraded Allergan to “equal weight” from “overweight.”
In her report, Chen said that Scottsdale-based Medicis expects its Reloxin, a Botox competitor, to be approved by the end of 2008 or early 2009.
Chen also wrote that J & J; has submitted an application to the Food and Drug Administration for a competitor to Lap-Band, which Allergan got in its 2006 buy of Inamed Corp.
J & J;’s weight loss product’s expected to be approved later this year or early in 2008.
“Approximately 14% of Allergan’s sales will be subject to potential competition from Johnson & Johnson and Medicis, starting as early as the end of 2007,” Chen said.
Mentor Corp. of Santa Barbara may be a stronger competitor in the medical cosmetics market, Chen said.
Allergan should boost research and development investment to bolster its pipeline, as well as focusing on capturing market share ahead of the potential competition, Chen said in her note.
