Buying Inamed Corp. has taken up much of David Pyott’s time for the past six months or so.
The chief executive of Irvine-based Aller-gan Inc. stepped out late last month to talk about how he got the deal done, along with other thoughts. Aller-gan bought Santa Barbara’s Inamed for $3.2 billion in March.
Pyott, a worldly Scotsman, held court at the University of California, Irvine, before business school students and guests at the Beckman Center at UC Irvine.
The university’s Paul Merage School of Business hosted Pyott as part of its distinguished speaker series.
Pyott’s chat combined “factoids” about Aller-gan’s performance during his eight years running the maker of eye, skin and other drugs.
He also laid out his goals for absorbing Inamed into Allergan.
And Pyott delivered a few sly zingers.
“We like to joke that we’re the ‘ology’ company,” Pyott said, referring to ophthalmology, neurology and urology. “Our strategy is all about building leadership in the niche businesses.”
Pyott, dressed in a blue suit, light blue dress shirt and yellowish tie, talked about how Allergan surprised many with its bid last year for Inamed.
At the time, Inamed had a deal to be bought for $2.5 billion by Arizona’s Medicis Pharmaceutical Corp.
“It was very, very stealthy,” Pyott said of Allergan’s bombshell bid. “I worked for a Swiss company (Sandoz, later Novartis AG) for 17 years. And you know the Swiss are very discreet. I made sure that nobody knew.”
The Inamed buy plunges Allergan knee-deep into cosmetic and other procedures, including obesity treatments, skin fillers and breast implants.
“If you’d asked me about (breast implants) two years ago, I’d have said ‘you must be kidding,'” Pyott said.
Of course, Allergan already is big in cosmetic medicine with Botox, the company’s flagship wrinkle reducer that accounted for $835 million of its $2.3 billion in sales last year.
How big? Botox is “just about to overtake” Pfizer Inc.’s Viagra as the drug with the highest brand recognition, Pyott said.
As Pyott usually does, he was quick to point out that Botox isn’t just vanity. Half of the drug’s sales still are for more serious conditions, including relaxing eye muscles and fighting spasticity in cerebral palsy patients.
Allergan is pushing to have Botox treat more conditions, including migraines.
Meanwhile, the drug’s cosmetic march presses on. Allergan plans to come out with Botox Cosmetic in Japan later this decade.
The hallmark of Pyott’s reign at Allergan: more research spending. Last year, Allergan spent $387 million on research and development, up nearly 300% from 1998, his first year on the job.
On the flip side, when talking about Allergan’s “stubbornly high” sales, general and administrative expenses, which made up for 40% of its revenue in 2005, he threw in a self-effacing jab at his Scottish heritage.
The high figure “proves, in fact, that we can sometimes be extremely generous in our spending habits,” he said.
For the most part, Wall Street has embraced the Inamed buy. But Allergan recently disappointed when it lowered its outlook for the current quarter.
St. Joseph Thinking Reform
St. Joseph Health System, the Orange-based hospital operator, plans to look at the topic of healthcare reform and is seeking public input.
The operator of three local hospitals started “Our Healthcare Future” to poll values and priorities patients and others would like to see in the national healthcare system.
St. Joseph kicked off its effort last week with a six-hour session at its Mission Hospital in Mission Viejo.
Next month, another session takes place at St. Joseph Hospital in Orange.
Participants are being asked to look at two options that St. Joseph says could serve as a basis to design a future health system.
The first is built on the traditional market-forces model, while the second is “built on the concept of social good.”
The forums are more about sharing ideals, rather than nuts and bolts issues, a St. Joseph spokeswoman said.
St. Joseph officials are seeking to replicate the sessions elsewhere in California and Texas.
Jack Glaser, St. Joseph’s senior vice president of theology and ethics, was part of the team that developed and tested the program. Florida-based Allegany Franciscan Ministries helped fund the program.
UCI Teams With Brits:
UCI and the University of California, San Diego, are working with four universities in England on research projects in biology, engineering and medicine. A $2.6 million grant from the British government is funding the effort, which will link scientists from UCI and UC San Diego with counterparts from universities in Bath, Bristol, Southampton and Surrey. Stem cells, nanotechnology and biopharmaceuticals are some of the areas set to be covered.
