Allergan Reports Third Quarter Operating Results; Earnings Per Share Up 24.4 Percent, Excluding One-Time Items; Board of Directors Declares Quarterly Dividend.

Business Editors & Health/Medical Writers

IRVINE, Calif.--(BW HealthWire)--Oct. 24, 2001

Allergan, Inc. (NYSE:AGN) today announced worldwide sales of $418.8 million for the quarter ended September 28, 2001. Worldwide sales increased 9.7 percent, or 13.8 percent at constant currency, over the third quarter of 2000.

Excluding the unrealized non-cash loss on derivative instruments of $0.01 per share, Allergan's diluted earnings per share for the third quarter of 2001 were $0.51, an increase of 24.4 percent over the third quarter 2000 earnings per share of $0.41. Including the unrealized non-cash loss on derivative instruments, Allergan reported diluted earnings per share of $0.50 for the third quarter of 2001.

Allergan also today announced that its Board of Directors has declared a third quarter dividend of $0.09 per share, payable December 7, 2001, to stockholders of record on November 16, 2001.

At constant currency rates, sales for the nine months ended September 28, 2001 increased by $117.5 million, or 10.1 percent, over the comparable period in 2000. Including the impact of currency, sales for the first nine months ended September 28, 2001 were $1,232.1 million, a 6.0 percent increase over $1,161.9 million reported for the nine months ended September 29, 2000.

Excluding the one-time charge related to the purchase of Allergan Specialty Therapeutics, Inc. (ASTI) and the net year-to-date unrealized non-cash gain on derivative instruments, Allergan reported diluted earnings per share during the first nine months of 2001 of $1.35, an increase of 21.6 percent over the Company's diluted earnings per share of $1.11 during the first nine months of 2000. Including the effects of those one-time items, Allergan's diluted earnings per share for the first nine months of 2001 were $1.05, compared with $1.12 for the first nine months of 2000.

"Numerous worldwide product approvals throughout the course of 2001 are beginning to lift sales growth and have generated more than 20 percent earnings per share growth. In addition, thanks to Allergan's entrepreneurial culture we have been able to bring products through the development and regulatory process faster than the industry average," said Chairman, President and CEO, David E.I. Pyott. "This prolific research and development output exemplifies Allergan's commitment to its specialty pharmaceutical businesses."

Specialty Pharmaceutical Performance

Eye Care Pharmaceutical Product Line

At constant currency rates, third quarter 2001 worldwide eye care pharmaceutical sales increased 17.9 percent over the third quarter of 2000. Including the effects of currency, third quarter worldwide eye care pharmaceutical sales amounted to $184.3 million, a 14.0 percent increase over last year's $161.6 million.

In September, Allergan launched Alphagan(R) P (Brimonidine Tartrate Ophthalmic Solution 0.15%), preserved with Purite(R) which has demonstrated comparable efficacy to Alphagan(R) (Brimonidine Tartrate Ophthalmic Solution 0.2%) with 41% less incidence of ocular allergy. Worldwide net product sales for the Alphagan(R) product line, which includes both Alphagan(R) and Alphagan(R) P ophthalmic solutions, indicated for lowering intraocular pressure (IOP) in patients with ocular hypertension and primary open angle glaucoma, were $61.5 million in the third quarter of 2001, an increase of 9.4 percent, or 10.7 percent at constant currency over the same period last year.

Worldwide net product sales of Lumigan(TM) (Bimatoprost Ophthalmic Solution 0.03%), indicated for the reduction of elevated intraocular pressure (IOP) in patients with open-angle glaucoma or ocular hypertension who are intolerant of other IOP-lowering medications or insufficiently responsive to another IOP-lowering medication, were $10.6 million for the quarter ended September 28, 2001.

At constant currency, eye care pharmaceutical sales for the first nine months of 2001 increased 10.9 percent, or $55.9 million over the same period last year. Including the effects of currency, eye care pharmaceutical sales were $553.3 million, an increase of 7.5 percent over the $514.6 million reported for the first nine months of 2000.

Worldwide net product sales for the Alphagan(R) product line, including sales for both Alphagan(R) and Alphagan(R) P ophthalmic solutions, were $185.3 million in the first nine months of 2001, a 5.4 percent increase, or 7.0 percent increase at constant currency, over the same period last year.

Year-to-date worldwide net product sales for Lumigan(TM) were $20.3 million. To date, Lumigan(TM) ophthalmic solution has received approval in seven countries. In addition to the United States, Lumigan(TM) received regulatory approval in Argentina, Brazil, Chile, Columbia, Mexico, and Trinidad and Tobago.

During the quarter, the Company filed the completed pediatric study report for Alphagan(R) with the United States Food and Drug Administration (FDA). Following the close of the quarter, the FDA Pediatric Exclusivity Board granted a six-month marketing exclusivity extension for Alphagan(R). In addition, during the quarter, Allergan filed with the FDA the new drug application for a fixed combination of brimonidine and timolol. Refresh Liquigel(TM), Allergan's new over-the-counter lubricant eye drop treatment for sufferers of dry eye, was launched in the United States after the close of the quarter. Refresh Liquigel's(TM) unique extra-strength formula contains one of the most effective lubricant and preservative systems, combining the strength of a gel with the convenience of a liquid eye drop.

According to Scott-Levin data as of October 12, 2001, Allergan's share of the United States glaucoma market, including new prescriptions for Lumigan(TM) and Alphagan(R) ophthalmic solutions, has grown 31 percent, or 4.4 share points, since the beginning of the year to reach 18.6 percent market share. Lumigan's(TM) and Alphagan's (R) latest new prescription shares were 4.2 percent and 14.5 percent, respectively.

Skin Care Line

Sales for Allergan skin care products were $18.4 million for the quarter ended September 28, 2001, an increase of 13.6 percent from the $16.2 million in sales reported in the third quarter of last year.

Worldwide net sales for Tazorac(R) and Zorac(R) brands (Tazarotene Gel and Cream 0.05% and 0.1%), indicated for the treatment of acne and psoriasis, were $11.2 million in the third quarter of 2001, a 45.5 percent increase, or a 47.1 percent increase at constant currency over the same period last year.

Allergan reported skin care product sales of $55.1 million for the first nine months of 2001, an increase of 13.8 percent over the comparable period in 2000.

Worldwide net product sales of Tazorac(R) and Zorac(R) were $29.7 million for the first nine months of 2001, a 34.4 percent increase, or 35.4 percent at constant currency over the same period last year.

Since the first of the year in the United States, Tazorac(R) new prescriptions and total prescriptions have grown 103% and 90% respectively, according to Scott-Levin data for the week ended October 12, 2001.

During the quarter, Allergan entered into a co-promotion agreement for Tazorac(R) with Procter & Gamble Pharmaceuticals Inc. for the United States. Procter & Gamble Pharmaceuticals will detail Tazorac(R) primarily to the general practitioner market. Allergan will continue to market Tazorac(R) to physicians currently covered by its in-house sales force.

In June, Allergan filed a new drug application with the U.S. FDA for tazarotene cream formulation in the treatment of the signs and symptoms of photodamage, including fine wrinkles and discoloration of skin that can result from sun exposure. Following the close of the quarter, Allergan received approval from the United States Food & Drug Administration (FDA) to market Tazorac(R) Cream (tazarotene cream 0.1%) for the topical treatment of acne vulgaris.

Botox(R)/Neurotoxin Product Line

At constant currency rates, Botox(R) (Botulinum Toxin Type A) Purified Neurotoxin Complex net sales for the third quarter increased by 30.8 percent over the third quarter of 2000. Including the effects of currency, sales for Botox(R) were $77.2 million during the third quarter of 2001, a 27.2 percent increase over 2000's third quarter sales of $60.7 million.

At constant currency rates, Botox(R) sales for the first nine months of 2001 increased 31.8 percent over the same period last year. Including the effects of currency, Botox(R) net product sales for the first nine months of 2001 increased 28.0 percent to $221.2 million from the $172.8 million reported over the same period last year.

After the close of the quarter, Botox(R) was granted a positive opinion by the European Union for focal spasticity of the wrist and hand in adult post-stroke patients. This positive opinion represents the intent to approve Botox(R) for focal spasticity in post-stroke adults in 14 individual countries and is a key step in the approval process. Ireland served as the Reference Member State in the Mutual Recognition Process.

During the quarter, Allergan's Botox(R) received approval for use in the management of severe hyperhidrosis (excessive sweating) of the axillae (underarm) that is unresponsive to topical treatments with antiperspirants or antihidrotics in the United Kingdom by the Medicines Control Agency (MCA) and in Canada by the Canadian Health Authorities (Therapeutic Products Programme).

Ophthalmic Surgical and OTC Performance

Ophthalmic Surgical Product Line

At constant currency rates, surgical sales increased 6.3 percent compared to the third quarter of 2000. Including the effects of currency, sales for the ophthalmic surgical business were $60.4 million during the third quarter of 2001 compared with $59.0 million reported for last year's third quarter.

At constant currency rates, ophthalmic surgical sales increased 6.4 percent over the first nine months of 2000. Ophthalmic surgical sales for the first nine months of 2001 were $182.8 million compared with $180.6 million reported for the same period last year.

During the quarter, Sensar(R) OptiEdge acrylic intraocular lens (IOL) used to replace the natural lens during cataract surgery was launched in the US and Europe. ClariFlex(R), Allergan's third generation silicone IOL, also used to replace the natural lens during cataract surgery, was launched in Europe. With its unique patented design of a squared posterior edge and a rounded anterior edge, ClariFlex(R), offers additional benefits over traditional squared edge lenses.

Contact Lens Care Product Line

At constant currency rates, contact lens care sales decreased 1.4 percent compared to the third quarter of 2000. Including the impact of currency, sales for the contact lens care business were $78.5 million for the third quarter of 2001, a decrease of 6.7 percent over 2000 third quarter sales of $84.1 million. Worldwide net product sales for Complete(R) brand solutions, indicated for soft contact lens care, were $35.1 million, in the third quarter of 2001, a 4.8 percent increase, or 10.4 percent increase at constant currency, over the same period last year.

At constant currency rates, contact lens care sales decreased 4.8 percent compared to the first nine months of 2000. Including the impact of currency, contact lens care sales for the first nine months of 2001 were $219.7 million or 10.5 percent less than the same period last year.

For the 12 months ended June 30, 2001, and according to the most recent available market data, the worldwide market for contact lens care products declined approximately 3 percent. Over the same time frame, Allergan increased its global market share to approximately 21 percent.

Complete(R) Blink-N-Clean(R) in-the-eye lens drops, which helps to remove and prevent protein buildup on soft contact lenses while you wear them, was launched in the U.S. during the third quarter and in Europe after the close of the quarter.

Additional Financial Highlights

Gross profit for the third quarter of 2001 was $315.2 million or 75.3 percent of net sales, which represents a 2.7 percentage point increase from the third quarter of 2000. The gross profit percentage for the nine months ended September 28, 2001, was 75.4 percent, representing a 3.0 percentage point increase from the comparable 2000 percentage. The gross profit percentage increased in 2001 compared to 2000 primarily as a result of shifts in the mix of products sold to higher margin products, including Botox(R) and skin and eye care pharmaceuticals.

SG&A expenses increased $9.8 million in the third quarter over the same period last year to $165.4 million. SG&A as a ratio to net sales was 39.5 percent for the third quarter of 2001, compared to 40.8 percent for the same period last year. Research and development expenses were $56.9 million and as a ratio to net sales were 13.6 percent for the third quarter of 2001.

On April 20, 2001, Allergan purchased the Class A Common Stock of Allergan Specialty Therapeutics, Inc. (ASTI) for $71.0 million. In the second quarter, Allergan had a one-time charge of $40.0 million, or $0.30 per share, related to in-process research and development and has capitalized the value of core technology on its balance sheet. Including the purchase of ASTI, research and development expenditures in the first nine months of 2001 increased $52.3 million to $197.5 million.

At September 28, 2001, Allergan's consolidated net worth was $929.9 million. Cash net of debt was $117.7 million as the Company held $752.9 million in cash and cash equivalents compared to $635.2 million in debt at September 28, 2001. Allergan's debt-to-equity percentage was 68.3 percent and debt-to-capital percentage was 40.6 percent at September 28, 2001. As of September 28, 2001, the Company's days-sales-outstanding was 63. The Company's inventory days-on-hand level was 109 as of September 28, 2001.

Earnings Per Share Impact by Adoption of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities"

As communicated in the first quarter earnings release, the Company's management decided not to designate its derivative instruments as accounting hedges upon its implementation of SFAS No. 133 on January 1, 2001. As a result, the Company marks-to-market all foreign exchange derivative contracts, (derivative contracts) and reports changes in the mark-to-market value on its statement of earnings under the heading unrealized gain/loss on derivative instruments. For the first quarter ended March 30, 2001 this mark-to-market activity resulted in an unrealized gain of $3.5 million, including the $2.5 million pre-tax effect of the adoption of SFAS No. 133 on January 1, 2001.

During the quarters ended June 29, 2001 and September 28, 2001, several of the outstanding derivative contracts, which accounted for $1.1 million and $1.0 million, respectively, of the unrealized gains reported on March 30, 2001 expired in an "in the money" position and resulted in realized gains of $1.9 million and $1.5 million, respectively. The reversal of the previously reported unrealized gains at March 30, 2001 for the expired derivatives have been accounted for as unrealized losses in the Company's statement of earnings while the realized gains have been accounted for as Other, net in the Company's statement of earnings.

In addition to recording an unrealized loss of $1.0 million on derivative contracts expiring in the third quarter ended September 28, 2001, the Company also recorded an $1.4 million unrealized loss representing the mark-to-market adjustment related to the remaining derivative contracts and in aggregate represent the one-time item.

The remaining derivative contracts presently in place at Allergan will mature during the fourth quarter of 2001 and throughout 2002. These derivative contracts provide Allergan with a unilateral option to exercise these derivatives at certain predetermined foreign exchange rate levels. To the extent these contracts mature in an "in-the-money" position, Allergan will exercise its unilateral option and will recognize a realized gain. At maturity, these derivative contracts may have an actual positive cash value, however, cannot have a negative cash value. Allergan's foreign exchange hedging strategy utilizes derivative contracts which function as "insurance" against potentially negative market environments and do not subject the Company to realized downside exposure at the maturity of the contracts.

Financial Outlook for 2001

Allergan believes that sales for the fourth quarter of 2001 will be in the range of $430 million to $450 million. Allergan's earnings per share in the fourth quarter of 2001 should approximate $0.60. In addition, Allergan has revised its objectives with respect to 2001 gross profit margins, to a level of approximately 75 percent, an increase of some 2.5 points from full year 2000 results.

Forward-Looking Statements

In this press release, the statements from Mr. Pyott, and our statements in the "Financial Outlook for 2001" section are forward-looking statements. It is important to note that our financial targets are not predictions of actual performance. Because forecasts are inherently estimates that cannot be predicted with precision, the Company's performance at times differed from its targets, and the Company often does not know what the actual results will be until after a quarter's end. Therefore, the Company will not report or comment on its progress during the quarter. Any statement made by others with respect to progress mid-quarter cannot be attributed to the Company.

Any other statements in this press release that refer to Allergan's estimated or anticipated future results are forward-looking statements. All forward-looking statements in this press release reflect the Company's current analysis of existing trends and information and represent the Company's judgment only as of the date of this press release. Actual results may differ from current expectations based on a number of factors affecting Allergan's businesses, including changing competitive, regulatory and market conditions; the timing and uncertainty of the results of both the research and development and regulatory processes; domestic and foreign health care and cost containment reforms; technological advances and patents obtained by competitors; the performance, including the approval, introduction and consumer acceptance of new products and continuing acceptance of currently marketed products; the effectiveness of consumer advertising and promotional campaigns; the timely and successful implementation of strategic initiatives; the uncertainty associated with the identification of and successful consummation and execution of external corporate development and partnering transactions; and Allergan's ability to obtain and maintain a sufficient supply of its products to meet market demand in a timely manner. In addition, matters generally affecting the economy, such as changes in interest and currency exchange rates and the state of the economy worldwide, can affect the Company's results. Therefore, the reader is cautioned not to rely on these forward-looking statements. The Company disclaims any intent or obligation to update these forward-looking statements.

Additional information concerning these and other risk factors can be found in press releases issued by Allergan as well as Allergan's public periodic filings with the Securities and Exchange Commission, including the discussion under the heading "Certain Factors and Trends Affecting Allergan and its Businesses" in Allergan's 2000 Form 10-K and Form 10-Q for the quarter ended June 29, 2001. Copies of Allergan press releases and additional information about Allergan are available on the World Wide Web at www.allergan.com, or you can contact the Allergan Investor Relations Department by calling 714-246-4636.

Allergan Inc.

Allergan, Inc., headquartered in Irvine, California, is a technology-driven, global health care company providing eye care and specialty pharmaceutical products worldwide. Allergan develops and commercializes products in the eye care pharmaceutical, ophthalmic surgical device, over-the-counter contact lens care, movement disorder, and dermatological markets that deliver value to our customers, satisfy unmet medical needs and improve patients' lives.

                            ALLERGAN, INC.
             Condensed Consolidated Statements of Earnings
                              (Unaudited)


in millions, except
per share amounts    Three Months Ended           Nine Months Ended
                   Sept. 28,     Sept. 29,     Sept. 28,     Sept. 29,
                     2001          2000          2001          2000

Product sales
Net sales         $ 418.8        $381.6      $1,232.1      $1,161.9
Cost of sales       103.6         104.6         302.7         320.2

         Product
         gross
         margin     315.2         277.0         929.4         841.7

Research services
Research service
revenues (primarily
from related parties
through April 16,
2001)                 8.2          15.1          49.7          44.5
Cost of research
services              7.5          14.2          46.5          42.0

         Research
         services
         margin       0.7           0.9           3.2           2.5

Selling, general
and administrative  165.4         156.4         533.7         490.1
Technology fees
from related
party                  --          (0.8)         (0.7)         (2.5)
Research and
development          56.9          47.8         197.5         145.2

Operating income     93.6          74.5         202.1         211.4

Interest income       6.7           5.2          25.8          14.0
Interest expense     (5.4)         (4.5)        (16.3)        (14.9)
Gain on investments,
net                    --           0.2            --           0.9
Unrealized gains/
(losses) on
derivative
instruments          (2.4)           --           2.5            --
Other, net            2.0          (0.1)          4.0           0.3
                      0.9           0.8          16.0           0.3

Earnings before income taxes
   and minority
   interest          94.5          75.3         218.1         211.7

Provision for income
taxes                27.4          20.5          74.8          61.4
Minority interest     0.3           0.2           0.7           0.3

Net earnings before
cumulative effect
of change in accounting
principle            66.8          54.6         142.6         150.0

Cumulative effect of
change in accounting
principle, net $0.7
million of tax         --            --           1.8            --

Net earnings      $  66.8      $   54.6       $ 140.8      $  150.0

Basic earnings per share:
  Before cumulative effect
  of change in accounting
  principle     $    0.51    $     0.42    $     1.08   $      1.15
   Cumulative
   effect of
   accounting
   change, net         --            --         (0.01)           --

    Net basic
    earnings
    per share   $    0.51    $     0.42    $     1.07   $      1.15

Diluted earnings per share:
  Before cumulative effect
  of change in accounting
  principle     $    0.50    $     0.41     $    1.06   $      1.12
   Cumulative
   effect of
   accounting
   change, net         --            --         (0.01)           --

  Net diluted earnings
  per share     $    0.50    $     0.41     $    1.05   $      1.12

Weighted average number
of common shares
outstanding:
         Basic      132.0         131.2         131.9         130.4
         Diluted    133.7         134.2         134.2         133.5


                            ALLERGAN, INC.
                 Condensed Consolidated Balance Sheets
                              (Unaudited)


in millions                                    Sept. 28,     Dec. 31,
                                                 2001          2000

Assets

Cash and equivalents                        $   752.9     $   773.9
Trade receivables, net                          288.1         290.1
Inventories                                     123.4         122.7
Other current assets                            156.7         139.6

Total current assets                          1,321.1       1,326.3

Property, plant and equipment, net              362.9         351.6
Other noncurrent assets                         317.2         293.1

Total assets                                 $2,001.2      $1,971.0

Liabilities and stockholders' equity

Notes payable                               $   107.9    $     59.2
Accounts payable                                 91.4          96.3
Accrued expenses and income taxes               286.7         277.0

Total current liabilities                       486.0         432.5

Long-term debt                                  527.3         584.7
Other liabilities                                58.0          80.0
Stockholders' equity                            929.9         873.8

Total liabilities and stockholders'
equity                                      $ 2,001.2      $1,971.0


                            ALLERGAN, INC.
                       Net Sales by Product Line
                              (Unaudited)


in millions          Three Months Ended            Nine Months Ended
                   Sept. 28,     Sept. 29,     Sept. 28,     Sept. 29,
                     2001          2000          2001          2000

Specialty Pharmaceuticals:

 Eye Care
 Pharmaceuticals   $184.3        $161.6     $   553.3    $    514.6

 Skin Care           18.4          16.2          55.1          48.4

 Botox(R)/
 Neuromuscular       77.2          60.7         221.2         172.8

         Total      279.9         238.5         829.6         735.8

Medical Devices and
  OTC Product Lines:

 Ophthalmic
 Surgical            60.4          59.0         182.8         180.6

 Contact Lens
 Care                78.5          84.1         219.7         245.5

         Total      138.9         143.1         402.5         426.1

TOTAL NET SALES   $ 418.8       $ 381.6     $ 1,232.1     $ 1,161.9

Domestic               55%           51%           56%           52%

International          45%           49%           44%           48%