Allergan Backs off From $200 Million Plant Expansion in Waco, Texas

Allergan outdoor sign next to office building

Dublin-based Allergan announced in 2016 plans to spend $200 million to expand its manufacturing facility in Waco, Texas. That plan would have increased production capacity by more than 50 percent and created more than 100 jobs in the area.

The plant in Waco manufactures Allergan’s Restasis (cyclosporine ophthalmic emulsion) for dry eyes. It is Allergan’s second best-selling drug, but the company expects it to face some tough competition in the near future after courts ruled against the company’s patent protections for the drug.

Allergan had signed a licensing deal about four years ago with the Saint Regis Mohawk Tribe in the U.S., hoping that tribal sovereignty would protect the patents, but the courts struck it down. No generics have won approval yet, but several companies have generic applications pending.

The patent scheme was perceived both legally and ethically as a cynical and blatant attempt to avoid U.S. patent laws. Although the company’s chief executive officer, Brent Saunders attempted to spin it as something being done to help the tribe, no one was buying that rationale, and neither did the courts.

Allergan sold the patent to the St. Regis Mohawk Indian Tribe in New York state for $15 million a year (where Allergan paid the tribe), and then leased it back for $13.5 million. The idea was the tribe’s sovereign immunity would shield it from patent challenges, which had been filed by Mylan, Teva Pharmaceutical and Akorn.

On July 20, a federal appeals court ruled that the tribe’s sovereign immunity didn’t protect it from inter partes review (IPR). The three-judge court ruled that IPR was more of an “agency enforcement action than a civil suit brought by a private party, and we conclude that tribal immunity is not implicated.”

In terms of the Waco plant, the facility produces several eye care products, including Restasis, Lumigan and Combigan.

Allergan indicated that it “has shifted [its] priority from expanding the Waco site to investing significantly in our existing operations.”

However, the company spokesperson said that Allergan “remains committed to our eye care business and operations in Waco.”

For example, Allergan has invested $180 million between 2015 and 2018 in improving the facilities. It is also planning to hire about 45 positions at that location. Those positions are currently open, and the company says it hopes to attract returning military veterans. It recently donated $125,000 to “Heroes Make America,” a career program sponsored by the National Association of Manufacturers. It offers training, certifications and assistant in securing college credit to veterans.

The expansion was to involve another 322,000 square feet. According to the Waco Tribune-Herald, Allergan is giving up $4 million in incentives.

Lisa Brown, Allergan spokeswoman, told the Waco Tribune-Herald, the company “has brought new formulations to the Waco site almost every year, including Refresh Repair, and we have plans to add new formulations currently in development.”

Allergan currently employs about 700 people in Waco. Tom Kelly, an economist with Baylor University, had projected that the Waco expansion would have boosted the Central Texas economy by $522 million during the first year of construction, with another $461 million annual economic impact following.

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