On Heels of Pfizer Deal, Allergan Eyes Texas Plant for Huge Investment, Possible Jobs

February 2, 2016
By Alex Keown, BioSpace.com Breaking News Staff

WACO, Texas – Allergan may be looking to expand its Waco, Texas manufacturing facility that would double productivity and call for the hiring of several hundred new employees, the Waco Tribune reported Monday.

Brent Saunders, chief executive officer of Allergan, told the Tribune the company is considering the Waco site, which he called Allergan’s U.S. “flagship” plant, for the expansion that would accommodate several new unnamed products in the company pipeline. Allergan currently manufactures eye and skin-care products at the plant, including dry-eye treatment Restasis and Latisse, a treatment to grow eyelashes for people with inadequate or not enough lashes.

Saunders told the Tribune the plant currently conducts operations 24 hours per day, seven days a week, so doubling capacity would require an expansion and additional employment. The plant, which opened in 1989, currently employs 750. The plant is currently undergoing a $7.5 million renovation of the first and second floors and to install new processing equipment to make packaging, the Tribune reported. Saunders added there are other plants that were also being considered for an expansion, but said the Waco site is one of the top prospects for investment.

The Waco plant has a major economic impact on the central Texas economy, according to a Baylor University study released by Allergan on Jan. 29. According to the research, the Waco plant “generated a combined economic impact on Waco area income of $263 million and an aggregate impact on total spending of $406 million in the Central Texas economy in 2015.”

The release of the economic impact study comes on the heels of Allergan’s announced merger with Pfizer, Inc. —a merger that has caused some politicians to decry because of Pfizer’s plan to shift its headquarters to Ireland to reduce its tax rate. As the deal has been proposed, Pfizer’s executive management will remain in New York and the company will keep operations across the United States, however, Pfizer will no longer have to pay taxes as a U.S. company. In November, Democratic presidential candidate Hillary Clinton said the merger was a way for Pfizer to avoid paying its “fair share” of the tax burden and “will leave U.S. taxpayers holding the bag,” Reuters reported at the time. The deal, which technically has Allergan acquiring Pfizer and shifting Pfizer’s domicile to Dublin for its lower tax rate, has an enterprise value of about $160 billion.

Pfizer said the merger with Allergan will enhance the company’s research and development capabilities in both new molecular entities and product line extensions. A combined pipeline of more than 100 mid-to-late stage programs in development and greater resources to invest in R&D and manufacturing is expected to sustain the growth of the innovative business over the long term.

In addition to Pfizer’s planned move to Ireland, analysts have suggested the combined companies could see massive layoffs in order to reduce redundancies, however, the companies have suggested layoffs won’t be that bad. Both Saunders and Pfizer’s chief executive, Ian Read, have said that the two companies’ operations don’t overlap much, and previous acquisitions have already led to cost cutting. The two global companies have an approximate employee base of 117,000 people, about 87,000 with Pfizer and 30,000 with Allergan.

Pfizer said it anticipates the Allergan deal will deliver more than “$2 billion in operational synergies” over the first three years after closing. The combined company is expected to generate annual operating cash flow in excess of $25 billion beginning in 2018.

However, even as the companies are planning to merge, there are already talks about possibly breaking it up into smaller entities. One of those companies would focus on research and development and the other would focus on mature, branded and generic drugs.