What to expect from Actavis-Allergan merger: CEO

Actavis to take Allergan name
Actavis to take Allergan name   

Actavis can continue to perform while integrating Allergan into its business, CEO Brent Saunders told CNBC on Wednesday after the company posted a better-than-expected adjusted quarterly profit.

"In fairness, we have a lot going on with the integrations, the deals, and people worried that our people can't stay focused on executing in the business while we have all this stuff going on, and we keep proving quarter after quarter that that's not true," he said in a "Squawk Box" interview.

The drugmaker also announced that it will adopt the name Allergan after a deal to purchase the company for $66 billion closes.

"When you look at those two equities, both had lots of value, but Allergan really stood for innovation, it stood for customer focus, and that really describes I think the new company we are today better than Actavis," Saunders said.

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The acquisition is on track to close by early next quarter, he added.

The preference is to grow organically rather than through mergers and acquisitions, he said. Actavis has done about $100 billion of deals in the past year alone.

However, Saunders declined to say what percentage of revenue the company would allocate to research and development, saying that metric is "horrible" and has gotten big pharma in a lot of trouble.

"If you spend just as a percentage of revenue, what happens? You then put junk into the pipeline to get up to that number, or you have great projects to go after, but you can't do it because you don't want to go over that number," he said. "Why can't you just spend against things that make sense?"

The company will invest about $1.7 billion into research and development next year, he said.

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He urged investors to look at the number of products coming out and the productivity of the money spent on those releases.

Actavis's fourth quarter earnings were helped by higher sales of its branded drugs in North America.

The company's net loss widened to $732.9 million, or $2.76 per share, in the fourth quarter that ended Dec. 31 from $148.4 million, or 86 cents per share, a year earlier.

However, on an adjusted basis the company earned $3.91 per share. Analysts on average had expected $3.67, according to Thomson Reuters.

Net revenue rose 46 percent to $4.06 billion. Total North American brands revenue nearly tripled to $1.83 billion.

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—Reuters contributed to this story.