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Actavis Cuts 350 Sales Positions in the U.S.

Zacks Equity Research

Actavis plc’s (ACT) shares remained unaffected by the company’s announcement regarding the restructuring of its U.S. Specialty Brands sales organization. The restructuring took place following the completion of the company’s Warner Chilcott acquisition on Oct 1, 2013.

The Actavis Specialty Brands segment will now have 750 sales professionals in the U.S. including sales reps, district managers, national account managers and associated management. This represents downsizing from the combined sales force of 1,100 at the time the acquisition was closed.

Actavis said that the new sales organization will cover the same or more than the legacy Warner Chilcott sales organization with all therapeutic areas being covered.

Actavis will provide additional details at its upcoming investor day in Jan 2014. Acquisitions have formed an integral part of Actavis' expansion strategy with the company completing four major acquisitions in the past few years. These include the Arrow, Specifar, Actavis Group and Warner Chilcott acquisitions.

We are positive on the recently concluded Warner Chilcott acquisition, which makes strategic and financial sense. The deal, which will be immediately accretive, will also provide strong operating cash flow and allow Actavis to de-lever its balance sheet. The tax rate will also be significantly below earlier levels.

With fewer major patent expiries slated to occur in the next few years, we are encouraged by Actavis’ focus on building its branded and biosimilars pipeline. Actavis currently carries a Zacks Rank #2 (Buy).

Some other stocks worth considering include Impax Laboratories Inc. (IPXL), KaloBios Pharmaceuticals, Inc. (KBIO) and Supernus Pharmaceuticals, Inc. (SUPN). While Impax holds a Zacks Rank #1 (Strong Buy), KaloBios and Supernus carry a Zacks Rank #2.

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