David Pyott
Age: 55
Company: Allergan
Year Named CEO: 1998
Number of Employees: 8,740
2008 Stock Performance: –37.1 percent
Annual Compensation: $11.9 million
Stock Options: $7.1 million
Allergan CEO David Pyott views the current economic environment as an opportunity to slim down and emerge “leaner and fitter than we’ve ever been before.” Doing so, he maintains, will widen the gulf between the Irvine, California–based health care company and its competitors. “In good times all of us build up body fat; this is the time to slim down,” Pyott says. For the maker of Botox and wrinkle fillers, a gastric band and breast implants, that regimen has meant cutting staff by 5 percent and sharpening its focus while maintaining its research and development budget and sales force. “I have a passionate belief in R&D and sales,” Pyott says.
Despite the economic downturn and its dampening effect on demand for Allergan’s products, the company’s fourth-quarter profit declined less than analysts expected. Allergan reported fourth-quarter earnings of $150.6 million, or $0.50 per share, versus $161.2 million, or $0.52 per share, during the same quarter of 2007. The company had predicted relatively low sales and profit for 2008 and had foreseen slowing revenue growth this year. “Clearly there’s been more turbulence than ever before. It was very, very difficult to forecast last year,” Pyott says. “Our general attitude is to plan for something that’s going to be pretty tough.”
Investors are impressed with Pyott’s game plan. “Allergan always seems to be at the leading edge of major trends in health care therapy,” says A.J. Rice, CEO of Allergan investor Pomeroy Capital in New York. “For most companies, if they have one product opportunity that puts them at the leading edge, we think that’s great. But Allergan consistently identifies the ‘next big thing’ in health care and positions the company to take advantage of it. That type of innovative consistency comes from the top of the company.” A Scotsman, Pyott has been at the helm of Allergan for 11 years, following a stint with Novartis. He was named a Commander of the Most Excellent Order of the British Empire, or CBE, by Queen Elizabeth in 2006 and has worked in many nations, including Austria, Malaysia, Singapore, Spain and Switzerland.
Investors don’t seem concerned with ongoing probes into Allergan by the U.S. Department of Justice and the Food and Drug Administration. The DoJ is investigating promotional practices of Botox, and the FDA is reviewing the safety of Botox and Botox Cosmetic, after reports of deaths and serious reactions in children who had been given the drugs to treat cerebral-palsy-related spasticity. Pyott says the company is cooperating fully.
