What does the merger of two cosmetic giants mean?

What does the merger of two cosmetic giants mean?

Allergan, the company that developed Botox as well as many other innovative multi-specialty healthcare products, has been offered $54 billion dollars to merge with Valeant, an aesthetic giant in its own right. At the moment Allergan is saying 'let's keep it in the family' while Valeant continues to nip at its heels.

Valeant CEO, Mike Pearson, wants his company to join the ranks of the world's five biggest drug makers by the end of 2016. But, so far, Allergan's board refuses to sit down, stating that merger with Valeant would be risky because it would hamper research and development and impede Allergan's sales and marketing force.

According to Reuter's, Allergan has cast arrows at Valeant's business model, stating that "Valeant's low organic sales growth was driven by price increases, that its acquired companies experienced market share erosion and that Valeant lacked transparency in its financial reporting." In a 3.5 hour session, which included multiple presentations from the Valeant management team, Pearson responded "It's unfortunate that Allergan has not taken the time to understand our business."

There is no predicting how this will play out, but there is an important takeaway for consumers. These huge multispecialty pharmaceutical giants play a central role behind the scenes in areas that are crucial to the aesthetic industry, therefore vital to you, as a consumer.

  • Clinical Research – These companies have traditionally been at the forefront of extensive product research and development, which is in the patient's best interest. For example, many of the injectables that are so popular today, and did not exist fifteen years ago, are the result of years of industry research and development.
  • Aesthetic Education – Industry allies, such as Allergan and Valeant, are instrumental in financially supporting efforts to educate consumers about aesthetic procedures and products. Consumer education is an important counterbalance to the misleading web and TV advertising that proliferates.
  • Practice Support – Industry representatives provide cosmetic surgeons with personal "inservice" information about practical applications of products and devices. The industry would suffer if consolidation decreased the presence of such reps.

Whether there's a merger or not, consumers will benefit if Allergan and Valeant continue to play an important role in research and development, consumer education and physician education about new tools and products. Support in these areas from large corporations contributes to the health and well-being of patients.