No furrowed brows for Botox boss on Allergan’s Irish plans

Never has a toxin been so good for a town, a country or a company.

In fact, Botox has been such a profit driver for Allergan, the multinational headquartered in Ireland, that its chief executive Brent Saunders says more toxins will be manufactured in Westport, Co Mayo, the company's facility that makes the global supply of the wrinkle-erasing drug. He sees Allergan increasing its Irish workforce substantially from its current level of 1,700 over the coming years.

“Ultimately, I don’t see why, over the next several years, that can’t double,” he says.

Sitting in the boardroom of a plush Dublin hotel, Saunders has no furrowed-brow concerns about the future of Allergan in Ireland. Quite the opposite. The company has been growing here since it established Irish operations 41 years ago on a greenfield site near Ireland’s holiest mountain, Croagh Patrick.

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In addition to the west of Ireland location, Allergan has a second manufacturing facility in Clonshaugh next to Dublin Airport, an international supply chain office in Earlsfort Terrace in Dublin and, since Allergan's €2.3 billion acquisition of body-contouring product maker Zeltiq Aesthetics last year, a medical devices business in Galway.

Almost one in 10 of Allergan’s global workforce, spread across 100 countries, is based in Ireland. Since 2013, the company has had its legal headquarters in Dublin as a result of a corporate tax inversion move that, Saunders says, put the €56 billion-market cap pharma giant on a level playing field with international competitors.

Irish heritage

As he sees it, the Irish connection runs deeps; Ireland is “an important part of Allergan’s heritage,” he says. “We are an Irish company. It’s part of who we are. Ireland is in Allergan’s DNA. We hold all of our board meetings here,” says the American, who is town for one of those meetings.

He has no personal Irish heritage, “except for my love for Ireland as CEO of an Irish company”, he says.

That love will be seen more and more in the coming years. Allergan is testing different categories of drugs that, if they pass the clinical test phase, could be produced here, says Saunders. They include other toxins beyond Botox that “could have potentially different characteristics”, expanding Allergan’s retina implant drug Ozurdex (also made in Westport) and potentially a new drug to treat age-related macular degeneration called Abicipar.

Allergan is aiming to increase Botox use among millennials and men, and growing sales internationally such as in the increasingly affluent Chinese market.

“Botox is great. Frankly, we haven’t introduced a novel toxin as a company since we launched Botox 15 years ago as a cosmetic, and as a therapeutic about 20 years ago,” says Saunders, who was chief executive of eye-care company Bausch & Lomb from 2010 to 2013, before he moved to Allergan in 2014.

“Over the next three to four years, we are likely to launch two or three additional toxins that will be partially developed and 100 per cent made in Westport. So the future of Westport is very bright from the toxin perspective but also from potentially new ophthalmic drugs as well. So it could be very exciting.”

Saunders sees growth potential in Galway where Allergan is manufacturing equipment for use in coolsculpting, a fat-freezing, non-invasive and non-surgical form of cosmetic treatment. “That is a new operation for us and it is one that over time could become larger and more important too,” says Saunders.

Allergan’s longevity in Ireland makes this multinational’s assessment of the State and its future in it different to other globe-spanning corporations, says Saunders. “Talent” weighs heavily on his mind. Irish employees have ascended the corporate ladder at the company, migrating to different jobs around the world, including Allergan’s US headquarters in Madison, New Jersey, about an hour’s drive west of Manhattan.

“This is a very special country with amazing people and amazing resources in terms of talent and technology. And so, having been part of Ireland for 41 years, having been headquartered in Ireland, every experience we have had in terms of production, or technology, or recruiting talent, or developing talent, has just been fantastic. Experience, positive experience, is what connects us to Ireland,” says Saunders.

“It has worked for us for 40-plus years. I suspect it will work and work better for another 40 years.”

This year, Allergan has invested a further €50 million in its Irish operations, expanding its laboratories and manufacturing operations to prepare the Westport and Clonshaugh facilities for the kind of product development Saunders envisages. The capital injection brings total investment in Ireland to more than €610 million, making it one of the State’s biggest multinational and foreign direct investors.

Infrastructural pressures

The 48-year-old executive is not, however, blind to the infrastructural pressures that have grown with the Irish economic recovery, including the shortage of housing.

“It is certainly something we watch carefully and we do want to see Ireland continue to advance and support the business community, whether that is through infrastructure, or skills training or the like,” he says.

“I have to say that there is no country that is perfect and I would still rank Ireland at the very top of my list in terms of working with the business community and helping assist in terms of developing new greenfield sites or even talent and skills training. And so we would always want more and want it to be stronger and better but I think Ireland is as competitive a country as I have ever experienced.”

Had he a wish list for the Government, at the top would be further development in skills and technology training, with a focus on science. On the 40th anniversary of its Irish operation, Allergan introduced a €50,000 award programme involving six Irish universities and colleges to encourage research and innovation.

“If we could find a way to further play our role with the Government and the academic centres, and perhaps maybe even some of the start-up community within Ireland, to create a stronger scientific ecosystem, that would be ultimately the complete package for Allergan inside of Ireland,” he says.

Despite being a “significant exporter” out of Ireland, Brexit is “not a huge concern” for Allergan, says Saunders. The company has been in Ireland for so long that its ability to supply the world from its Irish operations will not be an issue after the UK quits the European Union next March, he believes.

Allergan’s British operations, on the other hand, could feel the pinch with staffing issues around visas and work permits.

“In the long run, we were smart to come here 41 years ago and be Irish versus being British,” he says.

Saunders sees upsides, not downsides, for the Irish life-sciences sector from Brexit.

“Maybe this offers Dublin an opportunity to potentially take some of that momentum from a place like Cambridge and build a better science and start-up biotech ecosystem around Dublin,” he says.

Political storms, such as Brexit, are nothing new to Saunders. During the 2016 US presidential election, Allergan’s proposed $160 billion mega-merger with Pfizer – another intended tax inversion to benefit from Ireland’s low corporate rate – drew brickbats from then candidate Donald Trump (“disgusting,” he called it). The deal was scuttled by the Obama administration.

Just like Allergan’s Botox blocks signals between nerves and muscles, Saunders has blocked out some of the noise from US politics, which he says has become “so angry”. “This phase of American politics has to play itself out still,” says the Allergan boss.

Next Thursday, Saunders will honoured with an award from the New York-based business group, the Ireland-US Council – two days after the US midterm elections where control of Congress is up for grabs.

Although Allergan’s headquarters switch to an Irish tax address predated his arrival at the company in 2014, Saunders defends the move, saying it was purely to put the company “on a strong competitive footing” to compete with European, Japanese and perhaps even Chinese pharmaceutical companies in the future.

“We needed an environment where we could be as competitive as they were, whether that is for R&D assets, capital, ability to invest,” he says. “In large part, our tax status as an Irish company allowed us to more freely invest in Westport, in Clonshaugh, in Galway or in other parts of Ireland.”

Saunders says Allergan was “not a US winner” in Trump’s corporate tax reforms enacted last year. They had a “slight net negative” for the company in cash terms.

He believes the reforms put the US on “a more equal footing” in terms of tax regulation and competitiveness with Ireland, but it will not make the company pack up and return home any time soon. “We are committed to staying in Ireland. This is our home,” he says.

A more regular political storm that Big Pharma faces is the cost of drugs. In recent days, Trump promised to crack down on the “global freeloading” on prescription drugs by proposing that US federal healthcare pay for expensive drugs at the average prices in countries such as France and Germany where they are far lower.

Intellectual property

Against concerns about the growing imbalance between what people have to pay for drugs and their cost, Saunders says there needs to be a solution that “keeps the scale and equilibrium”. Under what he calls “our social contract”, pharma companies have to make sure medicines are affordable and accessible to those who need them, but, equally, for-profit companies such as Allergan put a “tremendous amount of money at risk” every time they try to discover or develop a cure and they need to earn a return to cover that risk, he argues.

A new drug might require an investment of up to $3 billion to develop “for some unmet medical need” but the intellectual property generally only lasts a decade, after which patents expire.

“We get 10 years to essentially earn our investment back,” he says, explaining how products “magically” become generic and effectively “free to society”. He cites cholesterol-lowering statins and medicines for cardiovascular diseases as examples of innovative drugs paid for and developed by the biopharma industry that later became readily and cheaply available to patients.

“There’s no other industry where that happens. When Apple moves on to the next iPhone, it doesn’t give the old iPhones away for free. So we are a different industry and what we do has real responsibility to patients involved in it but we also cannot lose sight of the incentive we need to take on the huge scientific risks that exist to create new medicines,” he says.

Saunders believes Europe, where governments tend to be the payer for health, has “done a very good job at negotiating some of the best prices in the world” but he sees risks in the European pharma industry.

“You are starting to see companies in Europe not wanting to develop the next generation of drugs here because they don’t believe they will get the return on the risk of developing it,” he says.

“It will have no short-term impact but 10 years from now a patient may wake up in a hospital somewhere in Europe and not have a drug available to them because it was never studied and approved here.”

A more pressing concern for Saunders is making sure he recruits “the best new talent from around the world” to guarantee that seven- to 10-year product cycle that keeps Allergan’s pipeline to profit flowing.

“If there is something that keeps me up at night, it is making sure that we are as competitive as possible in terms of retaining and recruiting the best talent,” says the executive who received a remuneration package of $32.8 million (€28.9 million) last year for running a global business with 18,000 staff.

Given the plans for the Irish business, Westport, Dublin and Galway will be forefront in his mind.

C.V.

Name: Brent Saunders

Age: 48

Position: Chairman and chief executive of pharmaceutical multinational Allergan

Nationality: American

Family: Married with two daughters

Interests: Golf and he's an Irish whiskey connoisseur

Something you Might Expect: He visits Ireland as many as 12 times a year

Something that Might Surprise: He has an identical twin who is a maxillofacial surgeon in New Jersey; they have joked about switching jobs for a day.