Allergan: The Power Of Botox

Allergan (NYSE: AGN) announced its second quarter earnings and a dividend of $.05 a share. The company can afford it. Allergan made $242 million in net income on $1.27 billion in sales. The specialty healthcare company reported $0.78 diluted earnings per share attributable to stockholders compared with $0.58 for the second quarter of 2009.

Allergan describes itself as a company that uncovers the best of science and develops treatments to help people reach their life’s potential. That is certainly true in terms of its Botox treatments which take wrinkles out of the skin to improve the appearance of aging. Botox is also used to increase the size of the lips. Sales of the product reached $360 million, and Allergan expects them to hit revenue of between $1.36 billion and $1.39 billion for the 2010 year.

Sales of the product have not been without trouble. The FDA has raised concerns about the treatment’s side effects. Some patients who are treated with Botox apparently experience chronic migraines.The vanity pharma business is clearly growing as sales of treatments like Botox and plastic surgery procedures increase.  Interest in plastic surgery spawned the hit TV show “Nip Tuck.”

Botox treatments are often less expensive than surgery, which means that youthfulness is available to a larger part of the population. In the meantime, sales of pain killers and migraine drugs are going up. One form of medicine helps sales of another. It is a cycle where everyone makes money.

Douglas A. McIntyre