Allergan Buy Strengthens Undervalued Pfizer's Moat

The Pfizer and Allergan merger should reinforce the wide moats that both companies bring independently. Allergan's industry-leading portfolio in the specialty markets of ophthalmology and aesthetics enjoys much higher barriers to entry and lower risk of generics than most drugs. Also, Allergan has limited product concentration risk, with only two drugs representing a high level of total sales: Botox and Restasis account for nearly 16% and 8% of revenue, respectively, following the generics sale to Teva. Botox’s complex manufacturing and strong brand power should keep generics at bay for an extended period. From Pfizer’s perspective, leveraging the entrenched global distribution should offer Allergan products increased marketing support.

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