Fitch Ratings affirmed the issuer default ratings of Allergan PLC and certain subsidiaries at BBB- with a stable outlook.
Key drivers for the rating included Allergan's large scale, along with its diverse product portfolio and a strong product pipeline. Fitch expects Allergan to generate mid- to high-single-digit organic sales growth, strengthened through strategic acquisitions, over the ratings horizon.
Fitch said the company has strong liquidity due to large cash balances remaining from the sale of its generics business to Teva Pharmaceutical Industries Ltd. and about 100 million shares of Teva, which may be monetized in mid-2017.
The agency also made a note of Allergan's new R&D strategy, termed "Open Science." It agrees that the strategy carries lower development risk than that of most traditional pharma firms, but believes that large cash outflows related to in-licensing and milestone payments will offset lower organic/adjusted R&D expenses, resulting in somewhat inflated EBITDA margins and understated leverage figures.
Fitch also expects the company to remain an active acquirer, using steady free cash flow and large cash balances for targeted growth-oriented assets.