Allergan plans to sell Lap-Band biz by midyear
|Allergan is looking to unload its obesity device business, which includes the once-popular Lap-Band--courtesy of Allergan|
Now that it's done "exploring strategic options," Allergan ($AGN) is all-in on plans to sell off its obesity-intervention business, expecting to ink a deal by June.
The unit, which includes Allergan's Lap-Band device and Orbera intragastric balloon system, has faced a slump in demand over the past year. In 2012, revenue plummeted 21.5% to $159.5 million amid concerns over Lap-Band's safety and a failed bid to get the device indicated for teens.
So, who wants to buy it? Last month, CEO David Pyott said the company had attracted interest from at least one private equity outfit, but Allergan is about four years removed from Lap-Band's heyday and is unlikely to find a blockbuster deal. As Bloomberg notes, the obesity unit peaked in 2009 with $296 million in annual revenue, but an onslaught of lawsuits and research questioning Lap-Band's effectiveness have whittled away at profits ever since.
In the meantime, Allergan is planning to report its obesity revenues as a discontinued operation from here on out. But the company believes it can keep growing even with Lap-Band in the rearview, projecting obesity-free 2013 revenue of up to $6.2 billion, about 8.9% over 2012. Driving that growth are big sales expectations for the eye drugs Alphagan and Restasis, plus another giant year for Botox, which Allergan projects to bring in up to $2 billion on its own.
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