Allergan’s CEO Discusses Q1 2011 Results
Allergan is off to a strong start for 2011, with growth driven by a wide range of products and franchises across many countries around the world. Our cash pay markets appear to be in an upswing. And for our reimbursed pharmaceuticals, we have good initial sales contributions from the many products approved in 2010. Finally, sales are benefiting from the weak dollar versus almost all global currencies.
Reviewing the results for the first quarter. Sales increased versus the first quarter of 2010 by 13.3% in dollars and by 12.2% in local currencies. Operating performance was strong with non-GAAP diluted earnings per share of $0.77, marking an increase of 18.5% versus the first quarter of 2010 and well above expectations provided at the time of the last earnings call. All of our operating regions, North America, Europe and Asia-Pacific, enjoyed double-digit sales growth in local currencies, with Latin America growing 32% in U.S. dollars.
Regarding regulatory approvals, we continued to make strong progress in many countries around the world. BOTOX for chronic migraine was approved during the quarter in Australia, Brazil, Chile, Hong Kong and Korea and is awaiting action at the European Medicines Agency. Several of those markets now await government pricing approval regarding their public programs.
OZURDEX received a positive opinion in the European Union for the additional indication of uveitis. OZURDEX was further approved for various indications in Switzerland, Canada, Argentina, Colombia, Korea, Hong Kong and New Zealand. Other products approvals will be commented in my reports on the individual businesses. Additionally, we’ll be taking our businesses direct in South Africa from July 1 of this year.
Now commenting the performance of the individual businesses. BOTOX enjoyed good growth in the first quarter, increasing 10.1% in dollars and 8.7% in local currencies versus prior year, with good growth stemming from both the therapeutic and aesthetic businesses. In the U.S., we continued to make good progress with the launch of the chronic migraine indication. There was considerable physician interest in the neurology community and about 2,000 physicians have been trained since approval, both through web-based and live injection training. About 2/3 of commercial lines now have policy coverage for BOTOX, with the commercial market accounting for about 2/3 of migraine prescriptions. I would, however, wish to remind you that our experience of the last 20 years with BOTOX and the adoption of therapeutic uses of BOTOX is always a long cycle.
Assuming future FDA approval of LEVADEX, the product partnered with MAP Pharmaceuticals, it is clear that Allergan will be in a strong strategic position with the ideal combination of products with prophylaxis of chronic migraine on the one hand and an abortive medication on the other hand for migraine. Regarding upper limb spasticity in the U.S., we are now experiencing double-digit year-over-year growth in focused accounts in academic medical centers. In the U.S. therapeutic market, Dysport and Xeomin have only gained marginal share even with sampling and Xeomin has captured little share in Canada.
Regarding BOTOX Cosmetic, we are pleased that the U.S. market seems to be growing around the mid-teens in units. With the flattening of Dysport procedure share around 17%, we are poised from April and May onwards, when we cross the anniversary of our market share loss last year, to start fully enjoying the rewards of an expanding market, that is, prior to the potential U.S. entry of Xeomin cosmetic. The European market, despite economic challenges, seems also a bit to be enjoying low double-digit growth. Market conditions in Latin America and Asia Pacific are buoyant. Even with limited market share loss in Europe with the entry of new neuromodulator competitors, we estimate that in Q4, that we enjoyed approximately worldwide 80% market share of the total neuromodulator market and 1% higher than in Q4 of 2009 despite the new competition.
Moving on to Ophthalmic Pharmaceuticals. Sales increased an encouraging 15.6% in dollars and 14.7% in local currencies, with double-digit performance in North America and Latin America and Asia Pacific, with Europe, Africa and Middle East growing in excess of 20%, thanks to the effect of direct selling operations in Turkey and Poland, a strong start to OZURDEX sales, as well as strong growth of LUMIGAN, GANFORT and our Artificial Tears line led by Optive. OZURDEX was launched in Spain with reimbursement in April. The global ophthalmic market continues to grow briskly, as also demonstrated by Alcon’s report in their first quarter sales growth of 16% in constant currencies, double-digit performance in both glaucoma and artificial tears. We’re pleased that Allergan U.S. has returned to growth after having suffered the effects of genericization of ALPHAGAN P 0.15% and also ACULAR. This is reflected in much improved growth of the ALPHAGAN and COMBIGAN franchise of 5.8% in local currencies, with COMBIGAN growing strongly, especially in the U.S., and ALPHAGAN being broadly flat around the world.
The LUMIGAN and GANFORT franchise grew 18% in local currencies. Wherever launched outside the U.S., GANFORT is performing strongly against its category competitors. It is considered by many ophthalmologists as maximum medical therapy in one convenient drop. In the U.S., LUMIGAN 0.1% is enjoying rapid uptake, especially by thought leaders and high-prescribing glaucoma specialists, enjoying an NRx share in the latest week of 35% of overall LUMIGAN prescriptions.
In the 5 weeks since the launch of generic Xalatan, we have observed an 88% genericization rate of latanoprost. Given the excellent formulary coverage for both LUMIGAN 0.01% and original LUMIGAN, we’ve seen very little impact on the LUMIGAN franchise. Many ophthalmologists expressed concern about the quality of ophthalmic generics. As has been the early experience in Canada and Europe, U.S. ophthalmologists appreciate the comparable efficacy of LUMIGAN 0.1% to the original, but with dramatically lower hyperemia and discontinuation rates. LUMIGAN 0.1% was launched during the quarter in Italy and Austria and in April in Brazil, Argentina, Colombia, Chile and Belgium.
RESTASIS continues to expand strongly, with 21% growth in dollars and local currencies. And with the genericization of Xalatan, it’s about to become the largest single-prescription ophthalmic pharmaceutical in the United States.
Regarding facial aesthetics, Q1 was a spectacular quarter with 48.5% growth in dollars and 47.0% in local currencies with extremely high growth in every operating region. It would seem that the dermal filler market is growing very strongly worldwide with more consumers entering the market given the comfort of the latest generation of lidocaine-containing hyaluronic acid products and more syringes being used per face. At the leading medical conventions around the world, there are increasing numbers of papers and symposia on the use of dermal fillers, especially for volumizing, which is addressed by JUVÉDERM VOLUMA where available. Additionally, we believe that Allergan is steadily gaining share given our innovative range of products across our facial portfolio and our distribution strength in almost all markets around the globe.
In the quarter, strong growth in the U.S. was boosted by the sell-in to physician offices of a consumer-directed promotion, combining purchases of BOTOX Cosmetic and JUVÉDERM. In Europe, we have benefited not only from VOLUMA, but also the launches of JUVÉDERM Hydrate and JUVÉDERM Smile, as well as DTC advertising in the U.K., France and Germany. Of the margin, European region sales were boosted by new launches in the Middle East and the Balkans as well as direct selling in Turkey and Poland. Additionally, JUVÉDERM XC and VOLUMA were launched in the Philippines.
Regarding skin care, sales enjoyed good growth at 16.0% in dollars and 15.8% in local currencies. LATISSE sales enjoyed a rebound, growing 34% in dollars, as well as in local currencies. Part of the strong performance is attributable to the sell-in of promotional offers to physicians, as well as a bonus program for consumers that is in the U.S. Consumer research conducted at the end of last year pointed to the need, strong need, to stimulate initial purchase as consumer satisfaction, having used the product, is high. Our investment in DTC with Claire Danes as a spokesperson for LATISSE is producing strong brand awareness. Outside the U.S., we have experienced good uptake of LATISSE in Canada. In Brazil, we heavily sampled the product in the quarter, pre-full commercialization and initiated sales in April. In Mexico, the Ministry Of Health approved DTC. In Asia, LATISSE was launched in April in Hong Kong and Singapore. In the U.S., we were encouraged that the FDA recently addressed the first warning letter to a company commercializing a supposed lash growth product containing active pharmaceutical ingredient.
Regarding sales of other skin care products, ACZONE increased strongly with acquisition dollars to support sales reported by SDI VONA accelerating at 43%. ACZONE is today one of the principal acne products in the U.S. market. In Q1, we outlicensed ACZONE to Valeant Pharmaceuticals in Canada, as we have many other priorities in the Canadian market and given Valeant’s strong presence in Canadian dermatology.
Ex-factory sales of TAZORAC declined in the quarter due to higher rebates and channel inventory change, but in-market sales and acquisition dollars increased double-digit. For breast aesthetics, Q1 sales increased 8.0% in dollars and 7.1% in local currencies, with particularly strong growth in Latin America and Asia Pacific. In the U.S., we benefited from the continuing trend of the market to higher-priced silicone gel implants, as well as good uptake for our latest range of tissue expanders with suture tabs.
Regarding the obesity intervention line, Q1 sales decreased 14.9% in dollars and 16.0% in local currencies. Overall, bariatric procedures in the U.S. market per our market research declined 12% in the first quarter year-over-year, with the reimbursed market declining less severely than the cash pay market, which now accounts for less than 6% of procedures, much of this attributable to unemployment rates. In March, it appears that the market may have recovered after a really poor January and February, but we’re cautious of course regarding short-term data points.
Within bariatrics, sleeve gastrectomy increased its share of the market from 6% a year ago to 15% in Q1, with share being taken almost equally from bands and bypass. In Q1, bands accounted for about 48% of the total market. And within the band category, LAP-BAND share increased by 5 basis points versus a year ago to about 73%. Overseas, we also had a very poor quarter for LAP-BAND in our key Australian market. Sales of our ORBERA Balloons increased modestly overseas, with strong gains in Brazil offset by a decline in Spain given the local weak economy. In the U.S., we continue to suffer from lack of access for patients to LAP-BAND even if coverage in principle is available to members of commercial insurance plans. High co-pays and necessity to demonstrate failure and medically supervised diet and exercise programs are real barriers, which we’re addressing through our managed markets organization.
We also intend to leverage our recent FDA approval for lower body mass index with payers. Furthermore, we also announced the discontinuation of the Easy Band system acquired in the EndoArt acquisition in Switzerland and closed our facility over there. Very high barriers established by the FDA for all new bariatric devices since the time of the acquisition in 2007 of Endoart have led to a considerable delay in timing of U.S. product approval, which of course accounted for a major part of global sales in our plan. That development, coupled with engineering challenges, contributed to a poor economic result and hence, the need for a tough decision to terminate this program. We, however, remain committed to bring the ORBERA product to market in the U.S.
Commenting urology. Sales decreased 2.9% as we absorbed the impact in generics of our overall — of our original SANCTURA product. In terms of acquisition dollars as reported by SDI for the first quarter, overall SANCTURA sales declined 5.4% given the impact of generics on the original SANCTURA product, offset by strong gains for SANCTURA XR, which is slowly gaining market share in the urology channel. The next catalyst for the urology business is the anticipated approval of BOTOX for neurogenic detrusor overactivity by the FDA later this year.
