the world of allergan
`
`2011 ANNUAL REPORT
`
`APOTEX 1055, pg. 1
`
`

`

`
`
`APOTEX 1055, pg. 2
`
`APOTEX 1055, pg. 2
`
`

`

`Allergan’s Global Presence
`
`LAUNCHED
`BOTOX®
`
`(onabotulinumtoxinA)
`for chronic migraine
`patients in Canada
`
`7%
`
` INCREASE IN
`NORTH AMERICA SALES,
`2011 VS. 2010
`
`BOTOX®
`
`approved in
`the United States and Canada
`for the treatment of urinary
`incontinence due to detrusor
`overactivity associated with certain
`types of neurologic conditions for
`patients who have an inadequate
`response to or are intolerant
`of an anticholinergic
` medication
`
`CANADA IS
`ALLERGAN’S
`LARGEST
`INTERNATIONAL
`MARKET
`
`BRAZIL IS
`ALLERGAN’S
`SECOND-LARGEST
`INTERNATIONAL
`MARKET
`
`21%
`
`INCREASE IN LATIN AMERICA
`SALES, 2011 VS. 2010
`
`Europe/Africa/Middle East
`
`Asia/Pacifi c
`
`•
`•
`• North America
`• Latin America
`
`40%
`
`of Allergan’s sales come from international markets.
`In 2011 sales in emerging markets increased 25 percent
`and represented 17 percent of Allergan’s sales.
`
`100+
`
`Number of countries where Allergan
`products are sold.
`
`APOTEX 1055, pg. 3
`
`

`

`17%
`
`INCREASE IN EUROPE,
`AFRICA AND MIDDLE EAST
`(EAME) SALES,
`2011 VS. 2010
`
`ESTABLISHED
`DIRECT OPERATIONS
`
`in South Africa and
`direct ophthalmic
`operations in Russia
`
`BOTOX® approved
`in 12 European countries
`for the management
`of urinary incontinence in
`adults with neurogenic detrusor
`overactivity resulting from
`neurogenic bladder due
`to stable sub-cervical spinal
`cord injury or
`multiple sclerosis 1
`
`BOTOX® approved
`in nine countries
`in the EAME
`region for symptom relief
`in adults with chronic migraine
`who have responded
`inadequately to or are
`intolerant of prophylactic
`migraine medications 1
`
`51%
`
`of Allergan's
`workforce is
`based outside the
`United States
`
`NO. 1
`
`OPHTHALMIC
`company in India2 and
`South Korea 3
`
`22%
`
`INCREASE IN ASIA/PACIFIC
`SALES, 2011 VS. 2010
`
`ESTABLISHED
`DIRECT
`OPERATIONS
`
`in the Philippines
`
`(1) Specifi c indication verbiage varies by country, and statement refl ects approvals 2011 through Feb. 22, 2012.
`(2) IMS India (New Sell-Out) Pharmacy, Hospital and Clinic currency sales data at ex-factory price levels for
`four quarters ending September 2011.
`(3) IMS Plus/Monthly December 2011, excluding retina.
`
`19%
`
`increase in number of countries where Allergan has
`direct sales operations from 2009 to 2011.
`
`1,600
`
`Allergan was granted nearly 1,600 patents worldwide
`from 2007 to 2011. The Patent Board recently ranked
`Allergan tenth in the global pharmaceutical industry
`based on patents granted, scientifi c strength, innovation
`cycle time, industry impact, technology strength
`and research intensity.
`
`APOTEX 1055, pg. 4
`
`

`

`< ALLERGAN’S GLOBAL PRESENCE
`
`Global Presence. Global Strategy. Global Results. What does it mean to
`be a global company? Providing your products to customers around the world. Having operations in
`key markets. Taking an international perspective and tailoring it to individual market needs. These are
`ingredients that make a company truly global. But at Allergan, we go further.
`
`It’s not just about physically being in a market, it’s about having a presence in that market. Allergan builds
`a deep understanding of the local market needs in our specialties—the needs of patients, of physicians,
`of payors and insurers, and of regulators. From that knowledge, we develop products that fulfi ll unmet
`needs in a meaningful way. We have a direct presence in 38 countries and, supplemented by distributors,
`operate in more than 100 countries around the world. More than half of our more than 10,000 employees
`are based outside of the United States, constantly deepening our experience within individual markets.
`This is the World of Allergan.
`
`At Allergan we amplify our operations in local markets by leveraging our centralized global capabilities.
`We manage the functional components of our business—such as Research & Development, Manufacturing,
`and Compliance—from a global perspective and apply these resources to support locally-developed strategic
`plans and accelerate our entrance into new markets as well as to expand our presence in existing markets.
`This is the World of Allergan.
`
`Our approach drives compelling results. In recent years, we have extended our leadership position in our
`specialties throughout the world. In 2011 we delivered continued quality results in developed markets in
`North America and Western Europe, despite challenges in those economies throughout the year. At the
`same time, our fastest growth occurred in emerging markets in Asia, Latin America and Eastern Europe.
`Our path is clear, and our opportunities are signifi cant. Our focused approach prepares us well for these
`opportunities and challenges; our success around the world shows a positive picture for our future.
`This is the World of Allergan.
`
`2011 ANNUAL REPORT 1
`
`APOTEX 1055, pg. 5
`
`

`

`Financial Summary
`
`In millions, except per share data
`
`STATEMENT OF OPERATIONS HIGHLIGHTS
`(As reported under U.S. GAAP)
`
`
`
`
`
`Product net sales
`
`
`
`Total revenues
`
`
`Research and development
`
`Earnings from continuing operations
`
`Loss from discontinued operations
`Net earnings attributable to noncontrolling interest
`Net earnings attributable to Allergan, Inc.
`
`
`Net basic earnings per share attributable to
`Allergan, Inc. stockholders
`
`Net diluted earnings per share attributable to
`Allergan, Inc. stockholders
`
`
`
`
`
`
`Dividends per share
`
`ADJUSTED AMOUNTS (a)
`Adjusted net earnings attributable to Allergan, Inc.
`Adjusted net basic earnings per share attributable to
`Allergan, Inc. stockholders
`
`
`Adjusted net diluted earnings per share attributable to
`Allergan, Inc. stockholders
`
`
`
`NET SALES BY PRODUCT LINE
`Specialty Pharmaceuticals:
`Eye Care Pharmaceuticals
`BOTOX®/Neuromodulator
`Skin Care
`
`
`Urologics
`Total specialty pharmaceuticals
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Medical Devices:
`Breast Aesthetics
`Obesity Intervention
`Facial Aesthetics
`Core medical devices
`
`Other
`
`Total medical devices
`
`Total product net sales
`
` Year Ended December 31,
`
`2011
`
`2010
`
`2009
`
`2008
`
`2007
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`$ 5,347.1
`5,419.1
`902.8
`938.1
`—
`3.6
`$ 934.5
`
`$ 3.07
`
`$ 3.01
`
`$ 0.20
`
`$ 1,131.8
`
`$
`
` 3.72
`
`
`$
`
` 3.65
`
`$ 2,520.2
`1,594.9
`260.1
`56.8
`
`4.432.0
`
`349.3
`203.1
`362.7
`915.1
`—
`915.1
`
`$ 4,819.6
`4,919.4
`804.6
`4.9
`—
`4.3
`$ 0.6
`
`$ 4,447.6
`4,503.6
`706.0
`623.8
`—
`2.5
`$ 621.3
`
`$ 4,339.7
` 4,403.4
`797.9
`564.7
`—
`1.6
`$ 563.1
`
`$ 3,879.0
` 3,938.9
`718.1
` 487.0
`)
` (1.7
`0.5
`$ 484.8
`
`$
`
`0.00
`
`$ 2.05
`
`$ 1.85
`
`$ 1.59
`
`$ 0.00
`
`$ 2.03
`
`$ 1.84
`
`$ 1.57
`
`$ 0.20
`
`$ 0.20
`
`$ 0.20
`
`$ 0.20
`
`$ 973.9
`
`$ 849.8
`
`$ 786.5
`
`$ 672.9
`
`$
`
`3.21
`
`$ 2.80
`
`$ 2.59
`
`$ 2.21
`
`$
`
`3.16
`
`$ 2.78
`
`$ 2.57
`
`$ 2.18
`
`$ 2,262.0
`1,419.4
`229.5
`62.5
`3,973.4
`
`$ 2,100.6
`1,309.6
`208.0
`65.6
`3,683.8
`
`$ 2,009.1
`1,310.9
`113.7
`68.6
` 3,502.3
`
`$ 1,776.5
`1,211.8
`110.7
`6.0
` 3,105.0
`
`319.1
`243.3
`283.8
`846.2
`—
`846.2
`
`287.5
`258.2
`218.1
`763.8
`—
`763.8
`
`310.0
` 296.0
`231.4
`837.4
`—
`837.4
`
`298.4
`270.1
`202.8
`771.3
`2.7
`774.0
`
`$ 5,347.1
`
`$ 4,819.6
`
`$ 4,447.6
`
`$ 4,339.7
`
`$ 3,879.0
`
`60.2%
`
`39.8%
`
`62.6%
`37.4%
`
`65.4%
`34.6%
`
`64.6%
` 35.4%
`
`65.7%
`34.3%
`
`PRODUCT SOLD BY LOCATION
`Domestic
`
`International
`
`
`
`(a) The adjusted amounts in 2011 exclude the after-tax effects of the following: 1) $3.4 million of external costs for stockholder derivative litigation costs associated with the U.S. Department
`of Justice (DOJ) settlement; 2) $125.0 million for upfront and milestone payments for technologies that have not achieved regulatory approval and related transaction costs of $0.7 million;
`3) $4.7 million restructuring charges, $2.2 million fi xed asset impairment, $9.4 million gain from the substantially complete liquidation of Allergan’s investment in a foreign subsidiary and
`intangible asset impairment of $16.1 million from the discontinued development of the EASYBANDTM Remote Adjustable Gastric Band System; 4) $104.0 million amortization of certain
`acquired intangible assets related to business combinations, asset acquisitions and product licenses; 5) $11.9 million of expenses from changes in fair value of contingent consideration
`and $1.9 million of integration and transaction costs associated with business combinations; 6) $4.3 million impairment of an in-process research and development asset related to a
`tissue reinforcement technology; 7) $3.3 million additional costs for the termination of a third-party agreement primarily related to the promotion of SANTURA XR®; 8) $2.0 million of costs
`associated with tax audit settlements for prior years’ fi lings; 9) $7.3 million non-cash interest expense associated with amortization of convertible debt discount; 10) $3.2 million impairment
`of a non-marketable equity investment; 11) $0.4 million rollout of fair market value inventory adjustment associated with the purchase of a distributor’s business in South Africa related to
`Allergan’s products; 12) $0.2 million of expenses related to the realignment of research and development functions; 13) a $0.1 million restructuring charge reversal related to the acquisi-
`tion of Serica Technologies, Inc. (Serica); 14) $1.9 million gain on the sale of investments; and 15) $11.1 million unrealized gain on derivative instruments.
`The adjusted amounts in 2010 exclude an income tax benefi t of $0.7 million for a change in estimated income taxes related to uncertain tax positions included in prior year fi lings, and the
`after-tax effects of the following: 1) $14.4 million of external costs associated with responding to the DOJ subpoena and related stockholder derivative litigation costs associated with the
`DOJ settlement; 2) $609.2 million of legal settlement costs associated with an announced resolution with the DOJ regarding Allergan’s past U.S. sales and marketing practices relating to
`certain therapeutic uses of BOTOX®; 3) $369.1 million of aggregate charges related to the impairment of SANCTURA® assets; 4) $36.0 million of licensing fee income for a development
`and commercialization agreement with Bristol-Myers Squibb Company; 5) $114.5 million amortization of certain acquired intangible assets related to business combinations, asset acqui-
`sitions and product licenses; 6) $7.9 million of expense from changes in fair value of contingent consideration, $33.0 million for a distributor termination fee and $1.1 million of integration
`and transaction costs associated with the purchase of a distributor’s business in Turkey related to Allergan’s products; 7) $43.0 million for an upfront payment for technology that has not
`achieved regulatory approval and related transaction costs of $0.4 million; 8) $10.6 million write-off of manufacturing assets related to the abandonment of an eye care product; 9) $25.1
`million non-cash interest expense associated with amortization of convertible debt discount; 10) $0.8 million restructuring charges and $0.5 million of integration and transaction costs
`related to the acquisition of Serica; 11) a $0.3 million restructuring charge reversal related to the phased closure of the Arklow, Ireland, breast implant manufacturing plant and a $0.2 million
`restructuring charge reversal related to the streamlining of the Company’s European operations; and 12) $7.6 million unrealized loss on derivative instruments.
`
`
`
`
`
`
`
`
`
`
`
`
`
`2 ALLERGAN
`
`APOTEX 1055, pg. 6
`
`

`

`To Our Investors
`
`Global Reach As I recently stood on the summit of Mount San Gorgonio, a peak in Southern California, at more
`than 11,500 feet, I had pause, in the tranquility of the mountain, to refl ect on the magnitude of the world we live
`in and the endless opportunities that lie in front of us. The world of Allergan is global, and, as an organization, we
`are fortunate that we can bring products to benefi t patients wherever they live. Particularly in the last several years
`we have accelerated our presence beyond the more developed markets of North America and Western Europe and
`established a direct commercial presence in countries such as China, Korea, Philippines, Russia, Poland, Turkey
`and South Africa. In these geographical markets, with the breadth of our product range and size of our ophthalmic
`pharmaceutical business, we have had the critical mass to acquire or take back distribution rights from third parties,
`and we have also established majority-owned joint ventures in Korea and India. In addition, building from this
`scale in ophthalmology, we have created other businesses in medical aesthetics and neurology in these markets.
`This approach refl ects our drive to be close to our customers around the world and establish in-depth knowledge of
`local market conditions so that we are in a position to execute with excellence. As a result, in 2011, sales in emerging
`markets increased by 25 percent and represented 17 percent of our worldwide sales. So, when I refl ect on the world
`of Allergan today, with a direct presence in 38 countries and selling capabilities in more than 100 countries when
`supplemented by our distributors, I am proud to say our opportunities seem endless, too. It has taken us more than
`60 years to establish the strong, enviable global footprint we have today, and our peak is nowhere near in sight!
`Dedicated to Growth In 2011, despite a volatile and challenging world economy, we were able to report double-digit
`growth: sales grew 10.9 percent in Dollars and 9.2 percent in local currencies with Diluted Earnings per Share on a
`non-U.S. GAAP basis increasing by 15.5 percent, whilst we continued to invest vigorously into R&D. Expenditures
`on R&D on a non-U.S. GAAP basis increased by 12.6 percent to $858 million or to 16 percent of sales. In contrast
`to many other companies in the pharmaceutical and medical device industries, in 2010 and 2011 we enjoyed the most
`productive period in our 61-year history in terms of the number of new products and new indications for which we
`secured regulatory approvals in the United States and other major countries around the world. For example, in the
`United States alone we received seven product approvals since the beginning of 2010, which is unprecedented in our
`history as well as for most health care companies. In the pharmaceutical industry, it is typical for a newly approved
`product to require fi ve-to-six years to reach peak global sales. In the medical device industry, the time period to reach
`peak sales is somewhat shorter and more variable, driven by the extent of the new product innovation. As a result,
`we believe that the stream of recent new product approvals sets Allergan up for considerable growth in the coming
`years, boosted by double-digit global market growth for many of our product lines.
`Particularly in the pharmaceutical industry, company growth is not only determined by the fl ow of new products,
`but also by the strength of patent estates, losses of marketing exclusivity, and the impact of generics on originator
`brands. The Patent Board recently ranked Allergan tenth on its list of the top 50 innovators in the pharmaceutical
`industry based on the number of patents issued and the strength of our patent portfolio, far ahead of Allergan’s sales
`ranking. Regarding patent expiries, we are uniquely positioned to handle competition from generics. BOTOX® is
`one of the largest biological pharmaceuticals in both its weight and complexity. In 2011, we required less than a
`gram of raw neurotoxin to supply the world’s requirements for 25 indications approved by Government agencies
`around the world. Even with the U.S. Food and Drug Administration (FDA) issuing draft approval guidance for
`biosimilars in early 2012, a competing biosimilar of BOTOX® will require considerable resources and time. In
`
`APOTEX 1055, pg. 7
`
`

`

`BUSINESS SEGMENTS – WORLDWIDE
`FY 2011 – $5.3 Billion (+11%)
`
`47% Ophthalmology
`Reimbursed 38%, Cash 9%
`
`Most pharmaceuticals in emerging markets are cash pay.
`
`60% Reimbursed
`40% Cash Pay
`
`1%
`Urologics
`Reimbursed 1%
`
`3%
`Skin Care
`Reimbursed 3%
`
`15% BOTOX® Therapeutic
`Reimbursed 14%, Cash 1%
`
`15% BOTOX® Cosmetic
`Cash 15%
`
`2% LATISSE®
`Cash 2%
`
`7% Facial Aesthetics
`Cash 7%
`7% Breast Aesthetics
`Reimbursed 2%, Cash 5%
`
`3%
`Obesity Intervention
`Reimbursed 2%, Cash 1%
`
`ophthalmic pharmaceuticals and dermatology, we have used our in-depth knowledge of patients’ needs to improve
`our products by optimizing and patenting drug formulations where pH and concentration of active ingredients can
`make a substantial difference in the product’s risk-benefi t profi le. This partly explains why the patents on most of our
`signifi cant ophthalmic products do not expire until after 2020. For some of our other products, such as RESTASIS®
`or TAZORAC®, it is onerous for generic products to enter the market, as the FDA requires full clinical studies to be
`conducted to establish bioequivalence.
`In addition to our organically developed pipeline, we in-licensed and acquired products from the outside. In 2011
`we announced a collaboration with MAP Pharmaceuticals, Inc. for Levadex®, an orally inhaled therapy for the
`acute treatment of migraine in adults, currently under review with the FDA. Levadex® is a complementary product
`in our neurosciences portfolio to BOTOX® for chronic migraine. We also acquired Vicept Therapeutics, Inc., with
`its topical cream product, which is in phase 2B for the treatment of erythema (redness) associated with rosacea. In
`addition, we strengthened our pipeline by licensing a DARPin® protein targeting VEGF for the treatment of retinal
`diseases from Molecular Partners AG in Zurich. Going forward, our strategy will be to continue to add to the depth
`of our pipeline by acquiring assets, effectively deploying a portion of our estimated annual free cash fl ow in excess
`of $1 billion.
`Signifi cant Results in 2011 Our business model of focusing on six distinct medical specialties, establishing leading
`market share positions and offering a unique mix of biologics, pharmaceuticals, medical devices and over-the-counter
`products once again paid dividends. Compared with most other health care companies, we also remain unique in
`our mix of both reimbursed and cash-pay products (paid for by the patient out-of-pocket). In 2011, we estimate
`that approximately 40 percent of our sales came from our cash-pay products. In addition to, for example, BOTOX®
`Cosmetic or JUVÉDERM® being cash pay in North America and Europe, most of our ophthalmic pharmaceuticals
`in emerging markets are also effectively cash pay given the lack of government health care systems and private
`insurance. While 2011 sales growth was driven by a diverse range of products, a few stand out. For the full year,
`total BOTOX® franchise sales, generated by both its medical and aesthetic uses, increased by 12.4 percent to over
`$1.5 billion. BOTOX® Cosmetic, marketed as VISTABEL® in Europe, increased by 12 percent, despite tough
`economic conditions in North America and Western Europe. BOTOX® for therapeutic indications also grew
`double digit by 12 percent and now accounts for just over half of the total BOTOX® franchise sales. Given the new
`approvals of BOTOX® in recent years, including its use for chronic migraine in the United States, Canada, Australia,
`most countries in the European Union and many markets in Latin America and Asia; for upper limb spasticity
`in the United States; and most recently, for urinary incontinence associated with neurogenic detrusor overactivity
`(spastic bladder) for patients who have an inadequate response to or are intolerant of an anticholinergic medication
`in the United States, Canada and some countries in the European Union, we believe that BOTOX® is poised for
`major growth in the coming years. Despite the entry of several new competitors in the aesthetics market around the
`world, BOTOX® continues to enjoy a 78 percent market share worldwide, down only 1 percent from a year ago.1
`
`Refl ecting on our ophthalmology business in 2011, RESTASIS® sales increased to $697 million and became
`the largest single prescription ophthalmic product in the United States by value2 given the growing acceptance
`by more specialists of the advantages of early intervention for specifi c patients in the treatment of chronic dry
`
`(1) YTD Q3 2011. Mixture of public information (earnings releases, earnings calls, 10Ks, 10Qs), AGN internal data, syndicated marketing research reports, analyst reports, Internet searches, competitive
`intelligence, market trackers, etc.
`(2) IMS U.S. Retail and Provider U.S. dollar sales data at ex-factory price levels for four quarters ended September 2011.
`
`APOTEX 1055, pg. 8
`
`

`

`MAJOR PRODUCT APPROVALS
`
`PRODUCT
`
`INDICATIONa
`
`AIPHAGAN® P (brimonidine
`tartrate ophthalmic solution) 0.1%b
`BOTOX® (onabotulinumtoxinA)
`
`BOTOX®
`
`Reduction of elevated intraocular pressure in
`patients with ocular hypertension or glaucoma
`Treatment of urinary incontinence due to detrusor
`overactivity associated with a neurogenic condition
`Prophylaxis of headaches in adults with
`chronic migraine
`
`LAP-BAND® Adjustable Gastric
`Banding System
`
`OZURDEX® (dexamethasone
`intravitreal implant) 0.7mg
`
`Weight reduction in obese adults with a body mass
`index (BMI) of at least 40 or a BMI of at least 30 and
`with at least one obesity related comorbid condition
`Macular edema in patients with retinal vein occlusion
`and/or treatment of non-infectious uveitis
`
`COUNTRY
`
`Japan
`
`Approximately 15 countries, including: Canada,
`France, Germany, Spain,c United States
`Approximately 25 countries, including: almost all
`countries in the European Union, Australia, Brazil,
`Canada, India, Korea
`Canada, United States
`
`Approximately 45 countries, including: Argentina,
`Brazil, Canada, India, Korea, Mexicoc
`
`In 2011 alone, Allergan secured 250+ approvals for a variety of products and indications in dozens of countries worldwide.
`
`(a) Specifi c indication verbiage varies by country.
`(b) Filed by Allergan’s partner Senju and approved in 2012.
`(c) Approved in 2012.
`
`eye. Our glaucoma franchise, consisting of LUMIGAN®, GANFORT™, ALPHAGAN®, ALPHAGAN® P and
`COMBIGAN®, increased 11 percent to more than $1 billion. And, since the second quarter of 2011, with the
`contribution of LUMIGAN® sales by our partner Senju in Japan, Allergan has become the second largest glaucoma
`company in the world.3 Allergan has a broad range of patent-protected glaucoma products available for use by
`ophthalmologists as single agents or in combination with other products to address the disparate needs of their
`glaucoma patients.
`Turning to our medical aesthetic portfolio, the JUVÉDERM® family, the world’s No. 1 selling dermal fi ller
`brand,4 grew strongly by 28 percent to $362.7 million in a rapidly expanding global market as physicians gain
`greater comfort and expertise in the use of dermal fi llers to restore lost facial volume and offer their patients
`the combined benefi t of BOTOX® Cosmetic with JUVÉDERM® to rejuvenate their facial appearance. In the
`medical aesthetics market, innovation remains key to helping physicians develop individual treatment plans
`for their patients based on their specifi c needs and concerns. As such, the latest introduction of JUVÉDERM®
`with lidocaine, which minimizes patients’ discomfort during treatment, was well-received. The introduction
`of JUVÉDERM VOLUMA™, a breakthrough product for facial volumizing, in key international markets also
`helped further expand the dermal fi ller market.
`Across all of our six specialty businesses, the primary detractor to growth was the LAP-BAND® System, which has
`suffered due to reimbursement restrictions imposed by U.S. health care plans and budget-challenged governments
`in Europe and Australia. In a time of high unemployment, high co-pays for all bariatric procedures have further
`caused declines in the overall market. As such, the benefi t of receiving an expanded approval for LAP-BAND® from
`the FDA to include more moderately obese patients, qualifying another 27 million Americans for the surgery, was
`still insuffi cient to offset the economic challenges facing the business this year. In 2012 we will focus on addressing
`the reimbursement barriers, utilizing recently published health economic data that support the payback period for a
`LAP-BAND® procedure in a morbidly obese patient suffering from Type 2 diabetes, which we estimate to be a little
`more than two years due to the medical savings that the patient recovers as a result of weight loss.
`Productivity & Effi ciency With ballooning health care costs across the world taking up a higher proportion of
`Gross Domestic Product, the industry is subject to enormous pressures from payors. These range from Government-
`mandated taxes and rebates under U.S. Health Care Reform to increased rebates for formulary access by U.S.
`managed care providers and to price cuts by Governments from Europe to Turkey and Korea. In 2011, we estimate
`that we absorbed a total of $130 million in pre-tax equivalent costs from Government-mandated programs, and
`still delivered strong earnings and revenue growth. With these pressures likely to continue in the near future, it is a
`strategic imperative to drive ever-greater operational effi ciency, as we have demonstrated and will continue to pursue
`through the following: Focus: Growth is driven by innovation and customer service. In 2011 more than 50 percent
`of all employees worldwide work in either R&D or sales. Manufacturing: Global supply of all of our products is
`manufactured in just fi ve plants; since 1997 we have 200 fewer employees in manufacturing whilst sales increased
`ninefold; capacity utilization in our plants is approximately 85 percent,5 while the norm in the pharmaceutical
`industry is less than 50 percent.6 Since 2009 alone, we have reduced the standard cost of manufacturing our key
`products7 by approximately 16 percent. Gross Margin: Thanks to lowered manufacturing costs and lower royalty
`
`(3) IMS 48 countries rollup, YTD Q3 2011.
`(4) Mixture of public information (earnings releases, earnings calls, 10Ks, 10Qs), AGN internal data, syndicated marketing research reports, analyst reports, Internet searches, competitive intelligence,
`market trackers, etc. for U.S. Dollar sales at actual rates for four quarters ending September 2011.
`(5) Allergan internal estimate based on an average of ~ 2.5 shifts per day, 6 days per week.
`(6) McKinsey & Company.
`(7) LUMIGAN®, COMBIGAN®, RESTASIS® and BOTOX®.
`
`APOTEX 1055, pg. 9
`
`

`

`LEADING MARKET SHARE POSITION IN GROWING MARKETSa
`
`WORLDWIDE
`MARKET
`SIZE ($M)
`
`WORLDWIDE
`MARKET
`GROWTH
`
`ALLERGAN
`WORLDWIDE
`MARKET SHARE
`
`Ophthalmics
`
`Neuromodulators
`
`Dermal Fillers
`
`Breast Aesthetics
`
`$18,127
`
`$2,124
`
`$960
`
`$820
`
`+10%
`
`+16%
`
`+24%
`
`+4%
`
`15%
`
`78%
`
`37%
`
`42%
`
`ALLERGAN
`WORLDWIDE
`MARKET
`POSITION
`
`#2
`
`#1
`
`#1
`
`#1
`
`(a) Q3 2011 Moving Annual Total. Ophthalmics – IMS Global (53 countries) at Q3-11 constant exchange rates and actual U.S. retina sales data. Neuromodulator/
`Filler/Breast– Mixture of public information (earnings releases, earnings calls, 10Ks, 10Qs), AGN internal data, syndicated marketing research reports,
`analyst reports, Internet searches, competitive intelligence, market trackers, etc.
`
`payments to third parties, our gross margin in 2011 was 86 percent. R&D: We are pleased with the many regulatory
`approvals that R&D has delivered, enabling us to bring new products to market. In addition, we are driving down
`costs by conducting more clinical trials outside of the United States whilst maintaining the highest standards in the
`quality of the data we gather to meet the regulatory requirements for new product approvals. Driving effi ciency, we
`have, since 2008, enrolled 24 percent more patients per clinical research associate thanks to improved systems and
`management tools.
`
`Corporate Responsibility Whilst we work hard to deliver a strong performance, we are committed to doing business
`in the most responsible and ethical manner. Considerable resources are dedicated to ensuring that we train on, and
`comply with, all Government laws and regulations around the world. We have strong and experienced audit and
`compliance teams in place that conduct not only fi nancial and operational audits but also compliance audits to
`ensure the quality of our training and business practices. We are also as committed to respecting our environment.
`Allergan is featured for the fourth consecutive year in the Leadership Index of the Carbon Disclosure Project for
`our approach to reducing our impact on climate change. Allergan has also become a component of the Dow Jones
`Sustainability Index. Companies are assessed and selected as part of the Dow Jones Sustainability Index based on
`their long-term economic, social and environmental asset management plans. Additionally, Allergan ranked fourth
`in the health care industry in Newsweek’s Green Rankings. In the coming fi ve years we estimate that we will reduce
`our energy consumption and greenhouse gas emissions by 15 percent in spite of considerable growth. Thanks to
`a decade-long program costing more than $65 million, Allergan developed a proprietary fully in vitro, cell-based
`potency assay for use in the stability and potency testing of BOTOX®. With the approval of this assay by regulatory
`authorities in the United States, Canada, Switzerland and Hong Kong, we will reduce the use of animal-based assay
`testing for our product by up to 95 percent or more over the next three years as we continue to gain additional
`worldwide approvals. Registrations are currently ongoing in several countries worldwide, and Allergan has recently
`received positive opinions for this assay in Europe for BOTOX® and VISTABEL®. And fi nally, to emphasize the
`importance we give to our communities, The Allergan Foundation has since 1998 contributed more than $33 million
`to public charities, which is supporting various organizations to advance their causes. As such we are proud that in
`its latest annual study of 2,500 public companies, Trust Across America, a think tank dedicated to unraveling the
`complexities of trustworthy business behavior, placed Allergan sixth.
`
`On behalf of our management and Board of Directors, I wish to recognize and thank our employees around the
`world for another year of delivering on our promise to help patients fulfi ll their life’s potential. The signifi cant results
`delivered in 2011 are the product of many individual and team contributions.
`
`Sincerely,
`
`David E.I. Pyott, CBE
`Chairman of the Board, President
`& Chief Executive Offi cer
`
`P.S. Check out the CEO blog launched
`late last year for Allergan’s perspectives
`on a variety of industry issues.
`
`APOTEX 1055, pg. 10
`
`

`

`Condensed Consolidated Statements of Earnings and Reconciliation of Non-GAAP Adjustments
`
`In millions, except per share data
`
`Year Ended December 31, 2011
`
`Year Ended December 31, 2010
`
`GAAP
`
`Non-GAAP
`Adjustments
`
`Adjusted
`
`GAAP
`
`REVENUES
`Specialty pharmaceuticals product net sales
`Medical devices product net sales
`Product net sales
`Other revenues
`Total
`
`
`
`
`
`$ 4,432.0
`
`915.1
`5,347.1
`72.0
`5,419.1
`
`$ —
`—
`—
`—
`—
`
`$ 4,432.0
`915.1
`5,347.1
`72.0
`5,419.1
`
`$ 3,973.4
`846.2
`4,819.6
`99.8
`4,919.4
`
`Adjusted
`
`$ 3,973.4
`846.2
`4,819.6
`63.8
`4,883.4
`
`Non-GAAP
`Adjustments
`
`(r)
`
`
`
`$ —
`—
`—
`(36.0
`(36.0
`
`) )
`
`722.0
`1,949.7
`761.6
`23.5
`
`———
`
`(s)(t)(u)(v)(w)
`
`(v)
`
`(i)
`
`(x)
`
`(y)
`
`(l)
`
`(m)
`
`(z)
`
`
`—
`)
`(67.9
`(43.0
`(114.5
`(609.2
`(369.1
`(0.3
`
`)))))
`
`1,168.0
`
` —
`
`722.0
`2,017.6
`804.6
`138.0
`609.2
`369.1
`0.3
`
`748.3
`2,153.9
`857.6
`23.6
`
`———
`
`(0.4
` )
`(a)
`(92.7
`(b)(c)(d)(e)(f)(g)
`(45.2
`
`(d)(h)
`(104.0
`(i)
`—
`(23.7
`(4.6
`
`(e)(j)(k)
`
`(l)
`
`))
`
`) ))
`
`(m)
`
`(n)(o)(p)
`
`270.6
`
` —
`
`748.7
`2,246.6
`902.8
`127.6
`—
`23.7
`4.6
`
`1,365.1
`
`6.9
`(71.8
`—
`(0.5
`(65.4
`
`) ) )
`
`OPERATING COSTS AND EXPENSES
`Cost of sales (excludes amortization of
`acquired intangible assets)
`Selling, general and administrative
`Research and development
`Amortization of acquired intangible assets
`Legal settlement
`Impairment of intangible assets and related costs
`Restructuring charges
`
`Operating income
`
`Interest income
`Interest expense
`Gain on investments, net
`Other, net
`
`1,426.6
`
`7.3
`(53.6
`—
`(8.8
`(55.1
`
`) ) )
`
`1,371.5
`393.3
`
`978.2
`—
`4.3
`
`25.1
` —
`7.6
`32.7
`
`1,200.7
`227.4
`
`(aa)
`
`973.3
`—
`—
`
`258.6
`
`7.3
`(78.7
`—
`(16.4
`(87.8
`
`) ) )
`
`170.8
`165.9
`
`4.9
`—
`4.3
`
`1,635.7
`
`6.9
`(64.5
`—
`(10.3
`(67.9
`
`) ) )
`
`1,567.8
`432.4
`
`1,135.4
`—
`3.6
`
`) )
`
`7.3
` —
`(9.8
`(2.5
`
`268.1
`70.8
`
`(q)
`
`197.3
`—
`—
`
`1,299.7
`361.6
`
`938.1
`—
`3.6
`
`$ 934.5
`
`$ 197.