Allergan says U.S. tax reform unlikely in 2017, sees strong year

(Reuters) – Allergan Plc AGN.N Chief Executive Brent Saunders said on Wednesday he does not anticipate U.S. tax reforms this year and that a border-adjustment tax could have a detrimental impact on the Dublin-based drugmaker.

President Donald Trump is pushing for a tax reform that will likely reduce tax rates and include a border-adjustment measure that could satisfy his interest in promoting U.S. manufacturing by taxing imports while exempting export revenues from corporate taxation.

House Speaker Paul Ryan said last week that U.S. House Republicans are unlikely to begin tackling tax reform legislation until the summer, focusing first on revamping the healthcare system.

“There’s no real plan yet for what tax reform will look like nor when it will appear,” Saunders said on call with analysts after the company reported a strong fourth quarter and forecast an upbeat 2017.

The company’s shares rose as much as 2.6 percent to $238.74 in morning trading.

Saunders, one of the first pharma leaders to oppose Trump’s immigration ban, said on Wednesday that the company is optimistic about the new administration’s stand against over-regulation.

Under Saunders, Allergan in September pledged to limit its drug price increases to 10 percent annually amid intensifying political and regulatory scrutiny into drug pricing.

The company said on Wednesday it had raised the price of certain U.S. branded products by 6.7 percent, on average, effective January.

Allergan said it expected adjusted 2017 revenue in the range of $15.50 billion to $15.80 billion, helped by key products and new launches.

Analysts on average were expecting $15.37 billion, according to Thomson Reuters I/B/E/S.

The company last month outlined “realistic” expectations for 2017, in context of its disappointing third-quarter performance.

Allergan’s revenue rose 7 percent to $3.86 billion in the fourth quarter ended Dec. 31, beating the average estimate of $3.77 billion.

The quarterly results and 2017 forecast should now allow for investors to take a pause and begin to analyze the Allergan growth story in its entirety, Cowen Co analyst Ken Cacciatore wrote in a note.

“This was a solid, comforting quarter … highlights the strengths of the underlying, core, future growth drivers.”

Since Allergan’s $160 billion merger with Pfizer Inc PFE.N collapsed in April, Saunders has orchestrated a flurry of “stepping-stone” deals, including its recent $2.9 billion purchase of regenerative medicine company LifeCell Corp.

Excluding items, Allergan earned $3.90 per share, handily beating the average estimate by 14 cents.

(Reporting by Natalie Grover in Bengaluru; Editing by Sriraj Kalluvila)