(Reuters) - Drugmaker Allergan Plc (AGN.N) raised its yearly earnings forecast on Thursday thanks to rising sales of mainstay product Botox, and said it did not expect to increase drug prices this year.
The remarks about curbing price hikes echoed sentiment from Allergan’s peers including Pfizer (PFE.N), Merck (MRK.N) and Novartis (NOVN.S), as U.S. President Donald Trump’s administration intensifies efforts to tackle escalating healthcare costs.
Allergan Chief Executive Officer Brent Saunders highlighted his company’s “social contract with patients,” and its pledge in 2016 to limit yearly price increases to 10 percent.
“My opinion is the days of driving growth through large price increases are coming to an end in our industry,” Saunders told analysts on a conference call, adding that the company had already hiked prices at the start of the year.
The Dublin, Ireland-incorporated company lifted its earnings target to reflect strength in its medical aesthetics business, which houses blockbuster wrinkle treatment Botox and the CoolSculpting system that helps people slim down by freezing fat away.
Sales of Botox, as well as sales from Allergan’s second most important drug, Restasis, exceeded Wall Street expectations by a comfortable margin in the second quarter ended June 30.
Overall revenue rose 2.9 percent to $4.12 billion.
Saunders also defended Allergan’s leadership structure, under which he is both CEO and chairman.
Investors have called for changes at the top at Allergan, following a series of setbacks to its pipeline of potential new drugs and a string of acquisitions that have taken the company’s debt pile past $25 billion.
Two prominent shareholders, Appaloosa Management and Senator Investment Group, asked the drugmaker’s board last month to split the roles of CEO and chairman and also review its acquisition strategy.
However, the board wants Saunders to keep his dual role alongside the lead independent director who also has significant responsibilities, Saunders said. This structure provided “the right independence, oversight and leadership for our board,” he said.
Allergan’s shares have fallen 30 percent in the past 12 months. The stock was slightly higher at $177.07 on Thursday afternoon.
(For a graphic on 'Allergan share performance' click reut.rs/2JXxg6a)
The company reported a smaller net loss attributable to ordinary shareholders of $472.5 million, or $1.39 per share in the second quarter.
Excluding one-time items, the drugmaker earned $4.42 per share, topping analysts’ average estimate of $4.13, according to Thomson Reuters I/B/E/S.
Allergan now expects 2018 earnings of between $16 and $16.50 per share, higher than an earlier estimate of between $15.65 and $16.25.
Reporting by Manas Mishra in Bengaluru; Editing by Saumyadeb Chakrabarty, Sriraj Kalluvila and Sai Sachin Ravikumar