`10K 1 a17071e10vk.htm FORM 10K
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`MYLAN - EXHIBIT 1102
`Mylan Pharmaceuticals Inc. et al. v. Allergan, Inc.
`IPR2016-01127, -01128, -01129, -01130, -01131, & -01132
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`SECURITIES AND EXCHANGE COMMISSION
`Washington, D.C. 20549
`Form 10K
`ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
`OF THE SECURITIES EXCHANGE ACT OF 1934
`For The Fiscal Year Ended December 31, 2005
`Commission File No. 110269
`
`Allergan, Inc.
`
`(Exact name of Registrant as Specified in its Charter)
`
`
`951622442
`(I.R.S. Employer Identification No.)
`92612
`(Zip Code)
`
`
`
`Delaware
`(State of Incorporation)
`2525 Dupont Drive
`Irvine, California
`(Address of principal executive offices)
`
`(714) 2464500
`(Registrant’s telephone number)
`Securities registered pursuant to Section 12(b) of the Act:
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`Title of each class
`Common Stock, $0.01 par value
`Preferred Share Purchase Rights
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`Name of each exchange on
`which each class registered
`New York Stock Exchange
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`Securities registered pursuant to Section 12(g) of the Act: None
` Indicate by check mark if the registrant is a wellknown seasoned issuer, as defined by rule 405 of the Securities
`Act. Yes No .
` Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
`Act. Yes No .
` Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
`Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past
`90 days. Yes No .
` Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation SK is not contained herein, and will
`not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in
`Part III of this Form 10K or any amendment to this Form 10K.
` Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a nonaccelerated filer. See
`definition of “accelerated filer and large accelerated filer” in Rule 12b2 of the Exchange Act. (Check one) Large accelerated
`filer Accelerated filer Nonaccelerated filer
` Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b2 of the Exchange
`Act). Yes No .
` The aggregate market value of the registrant’s common equity held by nonaffiliates was approximately $11,170 million on
`June 24, 2005, based upon the closing price on the New York Stock Exchange on such date.
` Common Stock outstanding as of February 27, 2006 — 134,659,267 shares (including 1,032,189 shares held in treasury).
`DOCUMENTS INCORPORATED BY REFERENCE
` Part III of this report incorporates certain information by reference from the registrant’s proxy statement for the annual meeting of
`stockholders to be held on May 2, 2006, which proxy statement will be filed no later than 120 days after the close of the registrant’s
`fiscal year ended December 31, 2005.
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` Item 6.
` Item 7.
` Item 7A.
` Item 8.
` Item 9.
` Item 9A.
` Item 9B.
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` PART I.
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` Item 1.
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` Item 1B.
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` Item 2.
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` Item 3.
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` Item 4.
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` PART II.
` Item 5.
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` PART III
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` Item 10.
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` Item 11.
` Item 12.
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` PART IV
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` Item 15.
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` SIGNATURES
` EXHIBIT 10.4
` EXHIBIT 10.5
` EXHIBIT 10.35
` EXHIBIT 21
` EXHIBIT 23.1
` EXHIBIT 23.2
` EXHIBIT 31.1
` EXHIBIT 31.2
` EXHIBIT 32
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` Item 13.
` Item 14.
`
`TABLE OF CONTENTS
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` Business
` Unresolved Staff Comments
` Properties
` Legal Proceedings
` Submission of Matters to a Vote of Security Holders
`
` Market For Registrant’s Common Equity, and Related Stockholder Matters and Issuer
`Purchases of Equity Securities
` Selected Financial Data
` Management’s Discussion and Analysis of Financial Condition and Results of Operations
` Quantitative and Qualitative Disclosures About Market Risk
` Financial Statements and Supplementary Data
` Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
` Controls and Procedures
` Other Information
`
` Directors and Executive Officers of Allergan, Inc.
` Executive Compensation
` Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
` Matters
` Certain Relationships and Related Transactions
` Principal Accountant Fees and Services
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` Exhibits and Financial Statement Schedules
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`Statements made by us in this report and in other reports and statements released by us that are not historical facts constitute
`“forwardlooking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21 of the Securities
`Exchange Act of 1934. These forwardlooking statements are necessarily estimates reflecting the best judgment of our senior
`management based on our current estimates, expectations, forecasts and projections and include comments that express our current
`opinions about trends and factors that may impact future operating results. Disclosures that use words such as we “believe,”
`“anticipate,” “estimate,” “intend,” “could,” “plan,” “expect,” “project” or the negative of these, as well as similar expressions, are
`intended to identify forwardlooking statements. These statements are not guarantees of future performance, rely on a number of
`assumptions concerning future events, many of which are outside of our control, and involve known and unknown risks and
`uncertainties that could cause our actual results, performance or achievements, or industry results, to differ materially from any
`future results, performance or achievements, expressed or implied by such forwardlooking statements. We discuss such risks,
`uncertainties and other factors throughout this report and specifically under the caption “Risk Factors” in Part I, Item 1A. below.
`Any such forwardlooking statements, whether made in this report or elsewhere, should be considered in the context of the various
`disclosures made by us about our businesses including, without limitation, the risk factors discussed below. Except as required under
`the federal securities laws and the rules and regulations of the U.S. Securities and Exchange Commission, we do not have any
`intention or obligation to update publicly any forwardlooking statements, whether as a result of new information, future events,
`changes in assumptions, or otherwise.
`
`PART I
`
`Item 1.
`Business
`General Development of Our Business
` Allergan, Inc. is a technologydriven, global health care company that develops and commercializes specialty pharmaceutical
`products for the ophthalmic, neurological, medical aesthetics, medical dermatological and other specialty markets. We are a pioneer
`in specialty pharmaceutical research, targeting products and technologies related to specific disease areas such as glaucoma, retinal
`disease, dry eye, psoriasis, acne and movement disorders. Additionally, we develop and market aestheticrelated pharmaceuticals and
`overthecounter products. Within these areas, we are an innovative leader in therapeutic and other prescription products, and to a
`limited degree, overthecounter products that are sold in more than 100 countries around the world. We are also focusing research
`and development efforts on new therapeutic areas, including gastroenterology, neuropathic pain and genitourinary diseases.
` We were originally incorporated in California in 1948 and became known as Allergan Corporation in 1950. In 1977, we
`reincorporated in Delaware. In 1980, we were acquired by SmithKline Beecham plc (then known as SmithKline Corporation). From
`1980 through 1989, we operated as a whollyowned subsidiary of SmithKline and in 1989 we again became a standalone public
`company through a spinoff distribution by SmithKline.
` Our Internet website address is www.allergan.com. We make our periodic and current reports, together with amendments to these
`reports, available on our Internet website, free of charge, as soon as reasonably practicable after such material is electronically filed
`with, or furnished to, the Securities and Exchange Commission. The information on our Internet website is not incorporated by
`reference into this Annual Report on Form 10K.
` In June 2002, we completed the spinoff of our optical medical device business to our stockholders. The optical medical device
`business consisted of two businesses: our ophthalmic surgical products business and our contact lens care products business. The
`spinoff was effected by contributing our optical medical device business to a newly formed subsidiary, Advanced Medical Optics,
`Inc., or AMO, and issuing a dividend of AMO’s common stock to our stockholders.
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` In connection with our spinoff of AMO, we entered into a manufacturing and supply agreement under which we agreed to
`manufacture certain products for AMO for a period of up to three years ending in June 2005. In October 2004, our board of directors
`approved certain restructuring activities related to the scheduled termination of our manufacturing and supply agreement. As part of
`the termination of the manufacturing and supply agreement, we eliminated certain manufacturing positions at our Westport, Ireland;
`Waco, Texas; and Guarulhos, Brazil manufacturing facilities. As of December 31, 2005, we substantially completed all activities
`related to the termination of our manufacturing and supply agreement with AMO.
` In January 2005, our board of directors approved the initiation and implementation of a restructuring of certain activities related to
`our European operations. The restructuring seeks to optimize operations, improve resource allocation and create a scalable, lower cost
`and more efficient operating model for our European research and development and commercial activities. Specifically, the
`restructuring anticipates moving key European research and development and select commercial functions from our Mougins, France
`and other European locations to our Irvine, California, High Wycombe, U.K. and Dublin, Ireland facilities and streamlining our
`European commercial back office functions. We have incurred and anticipate that we will continue to incur restructuring charges and
`charges relating to severance, relocation and onetime termination benefits, payments to public employment and training programs,
`transition and duplicate operating expenses, contract termination costs and capital and other assetrelated expenses in connection
`with the restructuring. We currently estimate that the pretax charges resulting from the restructuring, including transition and
`duplicative operating expenses, will be between $46 million and $51 million, and capital expenditures will be between $3 million
`and $4 million.
` On December 20, 2005 we entered into a merger agreement with Inamed Corporation and our wholly owned subsidiary, Banner
`Acquisition, Inc., pursuant to which we intend to acquire Inamed. Inamed is a global healthcare company that develops, manufactures
`and markets a diverse line of products to enhance the quality of people’s lives, including breast implants for aesthetic augmentation
`and reconstructive surgery following a mastectomy, a range of dermal products to correct facial wrinkles, the BioEnterics® LAP
`BAND® System designed to treat severe and morbid obesity and the BioEnterics® Intragastric Balloon (BIB®) system for the
`treatment of obesity.
` Consistent with the terms of the merger agreement, we have made an exchange offer for all of the outstanding shares of Inamed
`common stock on the terms and conditions set forth in the merger agreement and to acquire any shares of Inamed common stock not
`acquired in the exchange offer in a second step merger. In the exchange offer, Banner Acquisition has offered to acquire Inamed shares
`for either $84.00 in cash or 0.8498 of a share of our common stock, at the election of the holder, subject to proration so that 45% of
`the aggregate Inamed shares tendered will be exchanged for cash and 55% of the aggregate Inamed shares tendered will be exchanged
`for shares of our common stock. Upon completion of the exchange offer, Banner Acquisition will be merged with and into Inamed in
`the second step merger, with Inamed surviving the merger as our whollyowned subsidiary. The merger is intended to qualify as a
`reorganization under Section 368(a) of the Internal Revenue Code. The merger agreement terminates if the exchange offer is not
`completed by March 30, 2006.
` Inamed had previously executed a merger agreement under which it would be acquired by Medicis Pharmaceutical Corporation.
`Following its receipt of our acquisition proposal and prior to executing the merger agreement with us, Inamed terminated its merger
`agreement with Medicis and, in accordance with the terms of that merger agreement, paid Medicis a $90 million cash termination fee.
` The exchange offer is currently scheduled to be completed on March 10, 2006. However, the exchange offer will be extended if
`necessary to obtain United States Federal Trade Commission, or FTC, clearance. Obtaining clearance from the FTC is the one
`remaining material condition to closing the exchange offer.
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`2005
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`$1,321.7
` 830.9
` 120.2
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`46.4
`$2,319.2
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`
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`2003
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`
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`$ 999.5
` 563.9
` 109.3
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`82.7
`$1,755.4
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`Our Business
` The following table sets forth, for the periods indicated, net sales for each of our specialty pharmaceutical product lines, net
`earnings (loss), domestic and international sales as a percentage of total net sales and domestic and international longlived assets:
`Year Ended December 31,
`
`
`2004
`
`
`
`
`(in millions)
`
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`Net Sales by Product Line
`
`
`
`
`
` Eye Care Pharmaceuticals
`
`
`$1,137.1
`
` Botox®/ Neuromodulator
`
`
` 705.1
`
` Skin Care Products
`
`
` 103.4
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` Other(1)
`
`
` 100.0
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`Total
`
`
`$2,045.6
`
`
`Net earnings (loss)
`
`Sales
` Domestic
`
`International
`LongLived Assets
` Domestic
`
`International
`
`
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`$ 403.9
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`
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`$ 377.1
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`$
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`(52.5)
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`67.5%
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`32.5%
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`$ 470.7
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`$ 199.3
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`
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`69.1%
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`30.9%
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`$ 360.7
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`$ 197.2
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`70.4%
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`29.6%
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`
`
`$ 343.0
`$ 175.8
`
`(1) Other sales primarily consist of sales to AMO pursuant to a manufacturing and supply agreement entered into as part of the
`AMO spinoff that terminated in June 2005.
` See Note 14, “Business Segment Information,” in the notes to the consolidated financial statements listed under Item 15(a) of
`Part IV of this report for further information concerning our foreign and domestic operations.
`
`Eye Care Pharmaceutical Product Line
` We develop, manufacture and market a broad range of prescription and nonprescription products designed to treat diseases and
`disorders of the eye, including glaucoma, dry eye, inflammation, infection and allergy.
` Glaucoma. The largest segment of the market for ophthalmic prescription drugs is for the treatment of glaucoma, a sight
`threatening disease typically characterized by elevated intraocular pressure leading to optic nerve damage. Glaucoma is currently the
`world’s second leading cause of blindness, and we estimate that over 60 million people worldwide have glaucoma. According to IMS
`Health Inc., an independent research firm, our products for the treatment of glaucoma, including Alphagan®, Alphagan® P and
`Lumigan®, captured approximately 17% of the worldwide glaucoma market for the first nine months of 2005.
` Our largest selling eye care pharmaceutical products are the ophthalmic solutions Alphagan® (brimonidine tartrate ophthalmic
`solution) 0.2% and Alphagan® P (brimonidine tartrate ophthalmic solution) 0.15%, preserved with Purite®. Alphagan® and
`Alphagan® P lower intraocular pressure by reducing aqueous humor production and increasing uveoscleral outflow. Alphagan® P is
`an improved reformulation of Alphagan® containing brimonidine, Alphagan®’s active ingredient, preserved with Purite®. We
`currently market Alphagan® and Alphagan® P in over 70 countries worldwide. In September 2001, we filed a New Drug
`Application with the U.S. Food and Drug Administration, or FDA, for a brimonidine and timolol combination designed to treat
`glaucoma. In March 2005, the FDA issued an approvable letter for our brimonidine and timolol combination. During the fourth
`quarter of 2003, we received approval from Health Canada for our
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`brimonidine and timolol combination, which is marketed as Combigan眂ऀ. In December 2004, we received our first European
`approval of Combigan眂ऀ in Switzerland, and in April 2005, we received marketing approval for Combigan眂ऀ in the United
`Kingdom. In September 2005, we received a positive opinion from the European Union by way of the Mutual Recognition Process
`for Combigan眂ऀ. The positive opinion was received in all twentyone concerned member states in which we filed. During 2004 and
`2005, we also received approvals in Brazil, Argentina, Mexico, India, Australia, Taiwan and New Zealand.
` Alphagan® and Alphagan® P combined were the third best selling glaucoma products in the world for the first nine months of
`2005, according to IMS Health Inc. Combined sales of Alphagan®, Alphagan® P and Combigan眂ऀ represented approximately 12%
`of our total consolidated sales in 2005, 13% of our total consolidated sales in 2004 and 16% of our total consolidated sales in 2003.
`In July 2002, based on the acceptance of Alphagan® P, we discontinued the U.S. distribution of Alphagan®. In May 2004, we
`entered into an exclusive licensing agreement with Kyorin Pharmaceutical Co., Ltd., under which Kyorin became responsible for the
`development and commercialization of Alphagan® and Alphagan® P in Japan’s ophthalmic specialty area. Kyorin subsequently sub
`licensed its rights under the agreement to Senju Pharmaceutical Co., Ltd. Under the licensing agreement, Senju incurs associated
`costs, makes development and commercialization milestone payments, and makes royaltybased payments on product sales. We
`agreed to work collaboratively with Senju on overall product strategy and management. The marketing exclusivity period for
`Alphagan® P expired in the United States in September 2004, although we have a number of patents covering the Alphagan® P
`technology that extend to 2021 in the United States and 2009 in Europe, with corresponding patents pending in Europe. In May
`2003, the FDA approved the first generic form of Alphagan®. Additionally, a generic form of Alphagan® is sold in a limited number
`of other countries, including Canada, Mexico, India, Brazil, Colombia and Argentina. See Item 3 of Part I of this report, “Legal
`Proceedings” and Note 12, “Commitments and Contingencies,” in the notes to the consolidated financial statements listed under
`Item 15(a) of Part IV of this report for further information regarding litigation involving Alphagan®. Falcon Pharmaceuticals, Ltd., an
`affiliate of Alcon Laboratories, Inc., is attempting to obtain FDA approval for and to launch a brimonidine product to compete with
`our Alphagan® P product. In August 2005, we received FDA approval to market a new formulation of Alphagan® P (brimonidine
`tartrate ophthalmic solution) 0.1%, preserved with Purite® and launched the product in January 2006.
` Lumigan® (bimatoprost ophthalmic solution) 0.03% is a topical treatment indicated for the reduction of elevated intraocular
`pressure in patients with glaucoma or ocular hypertension who are either intolerant or insufficiently responsive when treated with
`other intraocular pressurelowering medications. Sales of Lumigan® represented approximately 12% of our total consolidated sales in
`2005, 11% of our total consolidated sales in 2004 and 10% of our total consolidated sales in 2003. In March 2002, the European
`Commission approved Lumigan® through its centralized procedure. In January 2004, the European Union’s Committee for
`Proprietary Medicinal Products approved Lumigan® as a firstline therapy for the reduction of elevated intraocular pressure in chronic
`openangle glaucoma and ocular hypertension. We currently sell Lumigan® in over 40 countries worldwide. In May 2004, we
`entered into an exclusive licensing agreement with Senju Pharmaceutical Co., Ltd., under which Senju became responsible for the
`development and commercialization of Lumigan® in Japan’s ophthalmic specialty area. Senju incurs associated costs, makes
`development and commercialization milestone payments and makes royaltybased payments on product sales. We agreed to work
`collaboratively with Senju on overall product strategy and management. In November 2003, we filed a New Drug Application with
`the FDA for a Lumigan® and timolol combination designed to treat glaucoma or ocular hypertension. In August 2004, we announced
`that the FDA issued an approvable letter regarding the Lumigan® and timolol combination, setting out the conditions, including
`additional clinical investigation, that we must meet in order to obtain final FDA approval. The Lumigan® and timolol combination
`has been filed in the European Union and is under evaluation by the European Medicines Evaluation Agency (EMEA).
` Ocular Surface Disease. In December 2002, the FDA approved Restasis® (cyclosporine ophthalmic emulsion) 0.05%, the first
`and currently the only prescription therapy for the treatment of chronic dry eye disease. We launched Restasis® in the United States
`in April 2003 under a license from Novartis for the ophthalmic use of cyclosporine. Dry eye disease is a painful and irritating
`condition involving abnormalities
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`and deficiencies in the tear film initiated by a variety of causes. The incidence of dry eye disease increases markedly with age, after
`menopause in women and in people with systemic diseases such as Sjogren’s syndrome and rheumatoid arthritis. Until the approval
`of Restasis®, physicians used lubricating tears as a temporary measure to provide palliative relief of the debilitating symptoms of dry
`eye disease. Effective April 19, 2005, we entered into a royalty buyout agreement with Novartis related to Restasis® and agreed to
`pay $110 million to Novartis in exchange for Novartis’ worldwide rights and obligations, excluding Japan, for technology, patents
`and products relating to the topical ophthalmic use of cyclosporine A, the active ingredient in Restasis®. Under the royalty buyout
`agreement, we will no longer be required to make royalty payments to Novartis in connection with our sales of Restasis®. In October
`2005, we entered into an agreement with NPS Pharmaceuticals to promote Restasis® to rheumatologists in the United States. In June
`2001, we entered into a licensing, development and marketing agreement with Inspire Pharmaceuticals, Inc. under which we obtained
`an exclusive license to develop and commercialize Inspire’s INS365 Ophthalmic, a treatment to relieve the signs of dry eye disease
`by rehydrating conjunctival mucosa and increasing nonlacrimal tear component production, in exchange for royalty payments to
`Inspire on sales of both Restasis® and, ultimately, INS365. In December 2003, the FDA issued an approvable letter for INS365 and
`also requested additional clinical data. In February 2005, Inspire announced that INS365 failed to demonstrate statistically
`significant improvement as compared to a placebo for the primary endpoint of the incidence of corneal clearing. Inspire also
`announced that INS365 achieved improvement compared to a placebo for a number of secondary endpoints. Inspire filed a New Drug
`Application amendment with the FDA in the second quarter of 2005. In December 2005, Inspire announced that it had received a
`second approvable letter from the FDA in connection with INS365.
` Ophthalmic Inflammation. Our leading ophthalmic antiinflammatory product is Acular® (ketorolac ophthalmic solution) 0.5%.
`Acular® is a registered trademark of and is licensed from its developer, Syntex (U.S.A.) Inc., a business unit of HoffmannLaRoche
`Inc. Acular® is indicated for the temporary relief of itch associated with seasonal allergic conjunctivitis, the inflammation of the
`mucus membrane that lines the inner surface of the eyelids, and for the treatment of postoperative inflammation in patients who have
`undergone cataract extraction. Acular PF® was the first, and currently remains the only, unitdose, preservativefree topical non
`steroidal antiinflammatory drug in the United States. Acular PF® is indicated for the reduction of ocular pain and photophobia
`following incisional refractive surgery. See Item 3 of Part I of this report, “Legal Proceedings” and Note 12, “Commitments and
`Contingencies,” in the notes to the consolidated financial statements listed under Item 15(a) of Part IV of this report for information
`regarding our successful patent infringement lawsuit against Apotex, Inc., et al. confirming the validity and enforceability of our
`intellectual property covering Acular®. Apotex, Inc. subsequently appealed that judgment and the United States Court of Appeals for
`the Federal Circuit (the Federal Circuit) left undisturbed the finding of infringement but remanded the matter for rehearing by the
`district court on one issue. Subsequently, the Federal Circuit vacated the district court’s permanent injunction barring the sale of the
`generic product but indicated that we could request a preliminary injunction from the district court, which we obtained in January
`2006 and which was extended in February 2006.
` In August 2003, we launched Acular LS® (ketorolac ophthalmic solution 0.4%), which is a version of Acular® that has been
`reformulated for the reduction of ocular pain, burning and stinging following corneal refractive surgery.
` Our product Pred Forte® remains a leading topical steroid worldwide based on 2005 sales. Pred Forte® has no patent protection
`or marketing exclusivity and faces generic competition.
` Ophthalmic Infection. A leading product in the ophthalmic antiinfective market is our Ocuflox®/ Oflox®/ Exocin® ophthalmic
`solution. Ocuflox® has no patent protection or marketing exclusivity and faces generic competition.
` We launched Zymar® (gatifloxacin ophthalmic solution) 0.3% in the United States in April 2003. Zymar® is a fourthgeneration
`fluoroquinilone for the treatment of bacterial conjunctivitis. Laboratory studies have shown that Zymar® kills the most common
`bacteria that cause eye infections as well as specific resistant bacteria. According to Verispan, an independent research firm, Zymar®
`was the number one ophthalmic antiinfective prescribed by ophthalmologists in the United States in 2005.
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` Allergy. The allergy market is, by its nature, a seasonal market, peaking during the spring months. We market Alocril® ophthalmic
`solution for the treatment of itch associated with allergic conjunctivitis. We also copromote Elestat® (epinastine ophthalmic
`solution) 0.05% in the United States under an agreement with Inspire within the ophthalmic specialty area and to allergists. Elestat®
`is used for the prevention of itching associated with allergic conjunctivitis. Under the terms of the agreement, Inspire provided us
`with an upfront payment and we make payments to Inspire based on Elestat® net sales. In addition, the agreement reduced our
`existing royalty payment to Inspire for Restasis®. Inspire has primary responsibility for selling and marketing activities in the United
`States related to Elestat®. We have retained all international marketing and selling rights. We launched Elestat® in Europe under the
`brand names Relestat® and Purivist® during 2004, and Inspire launched Elestat® in the United States during 2004.
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`Neuromodulator
` Our neuromodulator product, Botox® (Botulinum Toxin Type A), is used for a wide variety of treatments which continue to
`expand. Botox® is accepted in many global regions as the standard therapy for indications ranging from therapeutic neuromuscular
`disorders and related pain to cosmetic facial aesthetics. There are currently in excess of 100 therapeutic and cosmetic uses for Botox®
`reported in medical literature. The versatility of Botox® is based on its localized treatment effect and approximately 17 years of safety
`experience in large patient groups. Marketed as Botox®, Botox® Cosmetic, Vistabel® or Vistabex®, depending on the indication and
`country of approval, the product is currently approved in approximately 75 countries for up to 20 unique indications. Sales of Botox®
`represented approximately 36%, 34% and 32% of our total consolidated sales in 2005, 2004 and 2003, respectively.
` Botox®. Botox® is used therapeutically for the treatment of certain neuromuscular disorders which are characterized by
`involuntary muscle contractions or spasms. The approved therapeutic indications for Botox® in the United States are as follows:
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`• blepharospasm, the uncontrollable contraction of the eyelid muscles which can force the eye closed and result in functional
`blindness;
`• strabismus, or misalignment of the eyes, in people 12 years of age and over;
`• cervical dystonia, or sustained contractions or spasms of muscles in the shoulders or neck in adults, along with associated
`pain; and
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`• severe primary axillary hyperhidrosis (underarm sweating) that is inadequately managed with topical agents.
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` In many countries outside of the United States, Botox® is also approved for treating hemifacial spasm, pediatric cerebral palsy, and
`poststroke focal spasticity. We are currently pursuing new indication approvals for Botox® in the United States and Europe,
`including headache, poststroke focal spasticity, overactive bladder and benign prostatic hypertrophy. In April 2005, we announced
`plans to move forward with a large Phase III clinical trial program to investigate the safety and efficacy of Botox® as a prophylactic
`therapy in a subset of migraine patients with chronic daily headache, and in May 2005, we reached agreement with the FDA to enter
`Phase III clinical trials for Botox® to treat neurogenic overactive bladder and Phase II clinical trials for Botox® to treat idiopathic
`overactive bladder. In December 2005, we initiated Phase II clinical trials for Botox® to treat benign prostatic hypertrophy.
` Botox® Cosmetic. The FDA approved Botox® in April 2002 for the temporary improvement in the appearance of moderate to
`severe glabellar lines in adult men and women age 65 or younger. Referred to as Botox®, Botox® Cosmetic, Vistabel® or Vistabex®,
`depending on the country of approval, this product is designed to relax wrinklecausing muscles to smooth the deep, persistent,
`glabellar lines between the brow that often develop during the aging process. Health Canada approved Botox® Cosmetic for similar
`use in Canada in April 2001 and for upper facial lines in November 2005. In 2005, we extended our previously launched directto
`consumer marketing campaigns in Canada and the United States. These campaigns included television commercials and print
`advertising aimed at consumers and aesthetic specialty physicians. Currently,
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`over 30 countries have approved the glabellar line indication for Botox®, Botox® Cosmetic, Vistabel® or Vistabex®, including
`Australia, Brazil, Canada, Denm