Allergan Plc, which has been looking for ways to counter its stock slump as new threats to its top-selling skin and eye drugs have emerged, is considering options for its women’s health unit, according to people with knowledge of the matter.
The specialty pharmaceuticals product maker has held talks with advisers about strategic options for the unit, including a sale, said the people, who asked not to be identified because they weren’t authorized to speak publicly. A sale, which would likely to attract interest from private equity firms, could value the business at more than $5 billion, the people said.
A decision on whether to pursue a sale hasn’t been made and Allergan could elect to keep the business, the people said. The company is conducting a review as part of an effort to streamline its portfolio and might sell parts of its women’s health business, one of the people said.
A spokeswoman for Allergan, which is run from Madison, New Jersey, declined to comment.
Chief Executive Officer Brent Saunders told investors at Barclays health-care conference in March that Allergan was looking at options for addressing its share decline.
“We’re undertaking a full fresh look at every option we have available to us,” he said, according to a transcript. “We are going to look at every idea. We’re going to consider every option. And we’re going to see if there are opportunities to create value and we’re going to do that with a sense of urgency.”
Saunders said he thought Allergan’s valuation had become “severely disconnected” from its underlying fundamentals and the “reactions to real or perceived threats to our business have been largely overblown.”
The women’s health unit, which makes products such as the birth control pill Lo Loestrin Fe and menopause treatment Femring, generated $285.8 million in revenues for the fourth quarter, compared with $314.5 million during the same period in 2016, according to Allergan’s accounts. That’s about 7 percent of total sales of $4.3 billion, compared with 20 percent for its Botox wrinkle treatment, according to data compiled by Bloomberg.
The company’s stock has fallen 32 percent in the past year while the S&P 500 Health Care Index has gained 7.1 percent, not including dividends. Allergan shares fell 3.6 percent to $162.27 Monday, compared with 2.1 percent for the index.
Allergan, which gave Saunders a compensation package of $32.8 million for 2017, has been pursuing smaller acquisitions since its proposed merger with drugmaker Pfizer Inc. was scrapped in 2016. The company bought fat-reduction treatment Zeltiq and wound-care management LifeCell, according to its website.