According to people close to the matter, Allergan plans to cut costs and end development of some pipeline compounds in an effort to boost profit and lift forecasts, Bloomberg reported Wednesday. Allergan, which sources noted will also overhaul management incentives, is trying to convince shareholders that the company has better prospects as a standalone business as it looks to fend off a takeover attempt from Valeant Pharmaceuticals and William Ackman’s Pershing Square Capital Management.
Last month, Allergan CEO David Pyott indicated that the company would provide a more detailed plan including cost reductions when it releases second-quarter earnings at the end of July. The people said that along with cost cuts, which will include some legacy expenses, Allergan plans to tie management compensation more closely to achieving higher forecasts. The sources added that the company has also considered strategic options including an acquisition that would add growth product lines or buying back shares to appease investors and avoid being bought by Valeant.
Allergan, which has rejected Valeant’s takeover offers, including the most recent comprising $72.00 in cash and 0.83 Valeant common shares, has faced criticism from the Canadian company and Pershing Square. Earlier this week, Pershing Square proposed a slate of six nominees for Allergan’s board of directors ahead of a planned special shareholder meeting that will include a vote on the drugmaker’s board.