A Discussion Of Allergan’s Legacy And Future In Medtech Ophthalmology

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Hear from Allergan’s Past and Future: Highlights of interviews with Brent Saunders and Gavin Herbert.

Podcast Guest

Transcript

Tom Salemi: Hi everyone, welcome back to the OIS Podcast. This is Tom Salemi. Thank you for joining us today. Last week I had the chance to attend someone else’s ophthalmology conference. I went to OCTANe, Ophthalmology Technology Summit, which was kind of like an OIS-lite. The day was filled with panel discussions that included some of our OIS alum, including Bill Link and Andy Corley and Murthy Simhambhatla, and Tom Frinzi, who did not sing on stage, but off stage he did a short but fair Sinatra impersonation, which was actually quite impressive. But the highlight of the day, in my opinion, was the discussion between Jim Mazzo, of course of AcuFocus and another OIS regular, and Brent Saunders, the CEO of a company that was once known as Actavis. The day before the Technology Summit, Actavis had officially adopted the name Allergan. Actavis had closed on the Allergan deal, paying $70 billion for the company, and bringing an end to a long saga of M&A involving the Allergan name. And the timing of the announcement was perfect. It was fitting that Saunders would give his first full interview about the new Allergan in Southern California, which of course is the birthplace of Allergan. And Jim Mazzo did his typical excellent job, adding the right amount of levity and insight to the conversation. In the talk, Saunders committed to spending on R&D. Talked about spending 1.7 billion and told the group that innovation is the lifeblood of our industry, and it’s the lifeblood of our company. Saunders actually anticipated increasing R&D spend over time, and in particular he told the crowd that he sees an opportunity at the intersection of drugs and devices. Allergan intends to focus more on some medtech devices, probably more in the drug delivery space. But it’s a space where Allergan intends to grow. The statement had to please Gavin Herbert, who had cofounded Allergan in 1950. Herbert sat at the first row of tables from the stage, so he was nearby during the entire discussion about Allergan, and about ophthalmology in general. And Herbert had spoken very publicly, of course, against the takeover bid of Allergan by Valeant at a shareholder’s meeting a year ago. He suggested that such a deal would kill the company. And he really wanted Allergan to retain its smallness, relatively, but its singular focus on its industries and on R&D. While he never found his way to the stage, Herbert actually played a central role in the meeting in the Summit last week as speaker after speaker told the audience how their time at Allergan three or four decades ago really helped create the foundations of their professional lives. Through all the recollections, Herbert sat nearby with a subtle but proud expression on his face, kind of like a professor hearing from his more gifted students. And Herbert’s Allergan left an indelible imprint on ophthalmology. Not only did Allergan train many of the sector’s current leaders, but he cemented a place for himself and for ophthalmology in Southern California by creating the Gavin Herbert Eye Institute. I had the opportunity to speak with Herbert at our OIS@AAO conference last fall. We held a conference at The Palmer House Ballroom in Chicago, a place that Herbert recalled once housing the entire AAO meeting. The discussion is brief, but please take a few minutes and listen to the interview that I was very fortunate to have with Gavin Herbert.

TS: We’re at The Palmer House Hilton for OIS@AAO, and I’m here with Gavin Herbert, founder of Allergan. Gavin, I understand you’ve been in this ballroom before.

Gavin Herbert: Well, it’s kind of fascinating today, sitting here and listening to the presentation of so many new startup companies. Looks like there’s over 25 here today. But my first experience in this room over 50 years ago was the ophthalmic industry was so small that the entire commercialization group, the whole convention was actually held in this room. I think Allergan had a ten-foot booth and was doing certainly less than a million in sales when we first attended. So it’s fascinating and exciting to see all the new technology here today.

TS: And Allergan obviously turned out all right. What is your take of the companies you’re seeing here today, and in general, the innovation going on in ophthalmology?

GH: Well, I think it’s really exciting and amazing. And it’s one of the reasons we started a new eye institute at UCI in Irvine. Actually, in Irvine we have over 20 companies doing ophthalmic research. And we thought it was appropriate therefore to create a new eye institute, which we opened just one year ago this month.

TS: That’s going to house clinical trials as well as doing laser surgery and eyeglass fittings, and the whole kit and caboodle, right?

GH: Well, I think helping with clinical trials particularly in startup companies will be a key focus because the smaller companies really can’t afford the staffing that’s necessary. So we’re going to try and help where we can with particularly focusing on startup and new technologies.

TS: And what is your view of the broader ophthalmology industry? It’s going through some consolidation. I know you’ve got a personal take on potential acquisition that you might not be able to talk too much about. But do you have any broader concerns about consolidation and M&A in ophthalmology?

GH: Well, I’m concerned. You know, big isn’t always better. We certainly have seen that with companies like Pfizer and Smith Kline. I think it’s great that the specialty companies are able to focus as they have been, and I’m just eager to see Allergan continue as an independent company as we go forward.

TS: Well, it’s a pleasure to have you here today. Thanks for joining us.

GH: Thanks for being here.

TS: So Herbert clearly has to be pleased that Allergan will retain its place in ophthalmology. And Saunders was saying all the right things at the OCTANe conference. He not only talked about investing in R&D, but in part of the interview, and at Jim Mazzo’s prompting, he talked about Allergan’s policy, its fast kill policy of identifying early on whether or not an early stage product would work. The idea of failing fast is something that Jim Mazzo and Bill Link have campaigned for for years, especially in the startup realm, where companies can really make quick decisions and pivot more easily. But it’s something that larger companies are working at as well. In fact, it was a discussion at our Masters of the Universe panel at OIS in San Diego. We highlighted that conversation in the Podcast last well. And Saunders, in addition to talking about R&D, also stressed that Allergan would be customer focused. He planned to spend the next day, the day after that conference, making sales calls with a rep. And he told Mazzo that Allergan executives wouldn’t be eligible for bonuses if they didn’t interact with customers once a quarter. After he said that, that was the one point where Gavin Herbert finally spoke up and told Saunders that that’s exactly what Allergan did in the 70s. So once again, it was a day to celebrate ophthalmology, but it was a day to celebrate Allergan as well: Allergan’s past as well as Allergan’s future. So I hope you enjoyed this report from the Ophthalmology Technology Summit. It was a nice opportunity to visit someone else’s event. And thanks for listening to this Podcast. Tune in next week, and we’ll resume our interview schedule. And don’t forget we’re accepting company applications for presenting at AAO, the OIS@AAO in Las Vegas. That’s coming up in November. So go to ois.net to register for that conference, to hear more from ophthalmology leaders, and to find the application for presenting companies. Thank you for listening, and we’ll see you in Las Vegas.