Economic Concerns Weighing Down Allergan

Allergan Inc.’s medical cosmetic business continued to grow in the first quarter,thanks in part to sales of breast implants.

But the Irvine drug maker’s shares still fell on news of the earnings, as investors raised concerns about already slowing U.S. sales of the company’s flagship wrinkle-remover Botox and future sales during a down economy.

Botox aside, sales of breast implants, which still are a relatively small part of the company’s business, grew to $78.2 million in the first quarter, up 13.4% from the year-ago quarter. Breast implant revenue was part of an overall 23% sales hike to $203 million in what Allergan calls its medical device unit.

“Once again, we see a tale of two cities with the U.S. market being impacted by the economy and showing weak sales growth contrasted by all of our international regions registering double-digit growth,” Chief Executive David Pyott said during an earnings call.

Allergan makes silicone gel and saline implants, marketed under the Natrelle brand. Regulators in November cleared silicone implants for use in the U.S. after 15 years, giving Allergan a new profit window.

Allergan became a breast implant player through its $3 billion buy of Santa Barbara’s Inamed Corp. back in 2006. Its major domestic competitor is Mentor Corp., also in Santa Barbara.

Allergan has been taking market share from Mentor, said Tony Yao, a biotech analyst with Janus Funds, in a recent Barron’s article.

Economic concerns, Yao argues, are “not nearly as significant as people think” because implants only make up 8% of Allergan’s sales.

“In the U.S., our competitor has probably gained back some market share as it has been willing to discount prices by way of deals with free goods,” Pyott said.

Allergan hasn’t cut prices for its medical cosmetics, Pyott said.

The company has an advantage over competitors by cross-marketing Natrelle to select doctors with some of its other cosmetic offerings such as Botox, Juv