Allergan started out as a tiny but beloved Southern California eye care firm before expanding to a $130 billion company. Here's how the Botox-maker fell out grace with investors and then became a takeover target.

Allergan, the pharmaceutical company best known for making Botox, on Tuesday agreed to be acquired by AbbVie in a $US63 billion deal.

Investors had been unhappy with Allergan’s stock performance over the last year, and some have been vocal in calling for change.

Here’s how the company went from its start as a small but beloved company out of Southern California in the 1950s to the latest takeover target.

This article was initially published in June 2018 and has been updated.

Allergan was founded in 1948 by pharmacist Gavin S. Herbert, shown below on the left with Dr. Parmis Khatibi, a specialist at the University of California, Irvine Medical Center in 2014.

Wikimedia CommonsAllergan founder Gavin Herbert with Dr. Parmis Khatibi, a specialist at the University of California, Irvine Medical Center

Along with chemist Stanley Bly, Herbert created the company’s first drug, an anti-allergy nose drop that used the antihistamine neoantergan. They marketed the drug under the name Allergan.

The eye drops launched Allergan into the eye care field. Allergan Pharmaceuticals Inc. officially became a company in 1950, and the company focused on eye products before going public in 1970.

Allergan briefly merged with drug company SmithKline Beckman in 1980. In 1989, it separated from SKB when it was acquired by SmithKline Beecham (precursors to today’s pharma giant GlaxoSmithKline).

Around that time, the FDA approved a drug to treat lazy eye known as botulinum toxin type A, or Botox. Allergan acquired the company that made the new drug.

In the 1990s, ophthalmologist Jean Carruthers was treating people with a tight eyelid condition with Botox injections when she realised her patients’ wrinkles were going away as well. After publishing her findings, dermatologists began to pick up on the off-label use of Botox.

Source: The Journal of Dermatologic Surgery and Oncology

Botox grew so popular that at one point in 1997, the US had run out of its supply, inciting panic for those who used the treatment monthly to reduce wrinkles.

Source: The New York Times

It took until 2002 for cosmetic Botox to officially get the FDA’s stamp of approval. In 2017, the drug made $US2.2 billion in revenue.

Source: Allergan

By the mid-2010s, Allergan was involved in making treatments that fell under the umbrellas of eye care, “medical aesthetics” (breast implants, dermal fillers, and Botox for wrinkles), neuroscience (Botox is used in a different dose for people with overactive bladders and those with chronic headaches) and obesity.


In 2014, Allergan looked like the perfect takeover target for Valeant, whose CEO, Michael Pearson (shown below) wanted to turn it into a cash-generating machine.

Source: Forbes

In November 2014, generics drugmaker Actavis came in and “saved” Allergan from Valeant, buying the company for $US66 billion.

Actavis CEO Brent Saunders, 44, saw the deal through its close in March 2015, at which point he became the CEO of Allergan Plc – now a Dublin-based global pharmaceutical company.

In July 2015, Allergan agreed to sell its generic drug business for $US40.5 billion to Teva Pharmaceuticals. The move put Allergan in a spot to develop more branded drugs in areas like eye care, aesthetics, gastroenterology, and women’s health.

Source: Teva Pharmaceuticals

When the deal with Teva closed in August 2016, it left Allergan with $US40 billion to spend. Some of that went to repurchase shares, while some went to a series of acquisitions that totaled about $US6.5 billion. One of the bigger deals was for a company developing treatments for NASH, a liver condition that Saunders said would become “one of the next epidemic-level chronic diseases we face as a society.”

Source: Business Insider,Business Insider

Allergan and Pfizer tried to strike up a $US160 billion merger in 2015, which ultimately didn’t go through after the US Treasury released new rules governing so-called tax inversions that undercut the deal’s key rationale in April 2016.

Source: Business Insider

In 2017, Allergan struck an unusual deal over its eye drug Restasis. The deal transferred the drug’s patents to the Saint Regis Mohawk Tribe, with the intention of giving the drug sovereign immunity from certain patent challenges. It was a controversial move that ultimately became moot after a court invalidated other patents on the drug.

Source: Business Insider,Business Insider

Going into 2018, things didn’t get better for Allergan’s stock, and investors started getting frustrated, especially as the company went from considering a bid for drugmaker Shire to pulling out in just four hours.

Source: Business Insider

The frustrations led to a strategic review of the company to figure out what to do next. On the table was everything from share buybacks to acquisitions and even a split of Allergan to separate out its cash-pay businesses like aesthetics.

In 2018, Saunders said at a conference that Allergan was planning to sell its women’s health and infectious disease businesses, putting more attention on Allergan’s four “core” businesses, which are eye care, aesthetics, diseases of the central nervous system, and gastrointestinal conditions. Allergan’s stock fell on the news, suggesting investors weren’t satisfied.

Monik Markus/FlickrBirth control methods are among the drugs in Allergan’s women’s health business.

Source: Business Insider

David Tepper’s hedge fund Appaloosa has been calling for change at Allergan since April 2018. In particular, the firm called for a separation of the chairman and CEO roles, which Brent Saunders held. In February, Appaloosa called for a sale of the company.

Source: Business Insider

In June, a deal came through. AbbVie said on June 25 that it would acquire Allergan in a $US63 billion deal. AbbVie makes the world’s best-selling drug Humira, but is facing competition from other drugmakers starting in 2023. It’s betting that Allergan’s products like Botox can help the company grow through that rocky period.

Source: Business Insider

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