Pharmaceutical giant Allergan has quietly shelved ambitious plans it had announced for a $200 million plant expansion in Waco.
The expansion, which was feted with a 2016 groundbreaking with community and state officials, would have added 250 jobs and 322,000 square feet to the 30-year-old facility on Mars Drive. With the decision not to go forward with the project, Allergan will leave on the table $4 million in incentives that local governments had offered.
Still, the company is in hiring mode in Waco, where it employs about 700 and is looking to add 45 more jobs.
Since the 2016 expansion announcement, Allergan has endured upheavals, including the loss of a legal battle against generic competition for its Waco-produced dry-eye treatment, Restasis.
Baylor University economist Tom Kelly had predicted the Waco expansion would give the Central Texas economy a $522 million jolt during the first year of construction, with a $461 million annual economic impact after that.
Allergan officials said they have shifted priorities since the original announcement. The company is “focused on improving efficiencies at our global manufacturing sites, including Waco,” Allergan spokeswoman Lisa Brown said in an email message to the Tribune-Herald.
“This commitment, coupled with the expected loss of exclusivity for Restasis in 2018, has shifted our priority from expanding the Waco site to investing significantly in our existing operations,” Brown wrote.
Allergan has invested $180 million locally since 2015 to install two new multidose filling lines, two unit-dose filling lines, and a state-of-the-art microbiology laboratory, she said.
Allergan “has brought new formulations to the Waco site almost every year, including Refresh Repair, and we have plans to add new formulations currently in development,” Brown wrote.
“Allergan remains committed to our eye care business and operations in Waco,” she said. “The company continues to depend on the site for both our currently commercialized eyecare products, but also those that result from Allergan’s pipeline of future eyecare treatments.”
Brown said Allergan has 45 new positions open in Waco and hopes to attract returning military veterans. It has donated $125,000 to “Heroes Make America,” a career program sponsored by the National Association of Manufacturers that offers training, certifications and help with securing college credits to veterans, including those leaving Fort Hood, Brown said.
Waco Mayor Kyle Deaver, who was traveling Friday, said in a phone message he had heard rumors of Allergan’s decision, but nothing official.
“If that is true, it is certainly disappointing,” Deaver said. “But Allergan continues to invest in the Waco facility, create jobs and serve as a great corporate citizen. We as a city certainly will help in any way we can.”
Allergan received a $4 million commitment from the Waco-McLennan County Economic Development Corp. in response to the expansion plan, but Allergan has received no payments and the funds now are in limbo, said Melett Harrison, Waco’s deputy director for housing and economic development.
“If Allergan is not going forward, the money likely would be placed back in the fund for use on another project,” Harrison said.
Waco businessman Bill Clifton, who serves on the Waco-McLennan County Economic Development Corp. board representing the Waco Industrial Foundation, said he was troubled to learn of Allergan’s course change.
“This is something every pharmaceutical company is faced with,” he said. “They have costs associated with research and development, but they face political pressure over drug costs. I would say our disappointment is short-term. I’m very glad they are in this community. They have expanded several times. They chose Waco because of the onerous business environment in California and all the union problems they faced in New Jersey. Those factors drove their business to us, and we remain in an advantageous position.”
Clifton said he hopes Allergan will shift more research-and-development efforts to Central Texas, where the company can take advantage of the Baylor Research and Innovation Collaborative, or BRIC, and the university’s pledge to devote more resources to research.
Kelly, the economist, said he has not given up hope.
“I’m disappointed, but that’s not to say the expansion won’t happen eventually,” he said. “My study showed their facility is operating at 100 percent capacity, and if they wanted to move beyond existing products, get more adventurous, they would need to act.”
Besides Restasis, the Waco facility produces Lumigan and Combigan, both of which are used to treat glaucoma, as well as Refresh Plus and Refresh Tears, which are used to provide relief to irritated eyes, the company reports.
Todd Stoner, with Disciplined Investors in Waco, said Allergan raised eyebrows for its unconventional attempts at protecting its exclusive Restasis rights, including trying to assign those rights to a Native American tribe.
“That was a total reach, unreasonable, and something the government wouldn’t allow,” Stoner said. “They’ve grown through acquisitions, which also can be iffy, as these companies can have skeletons in their closets. They also have created a domicile overseas, in Ireland, to reduce their tax burden. Some of their efforts to improve stock price have overshadowed their product strength, and they do have strong products, such as Botox and plastic surgery products, paid for by patients. They don’t have to worry about insurance.”
Waco real estate agent Bland Cromwell collaborated with chamber officials to bring Allergan to its site on Mars Drive.
“It is disappointing, but nothing surprises me about corporate America anymore, and the company I knew 30 years ago doesn’t exist anymore,” he said.
Allergan now occupies a 400,000-square-foot facility, where employees earn an annual salary exceeding $78,000, according to Kelly’s calculations.
As recently as last year, Cromwell brokered a deal that allowed Allergan to acquire a 100,000-square-foot warehouse near its main plant, he said.
“It’s too bad,” Cromwell said. “But what we have is still good. One could say they are our strongest employer.”
Allergan has a presence in 100 countries and enjoyed revenues of $15.9 billion, according to filings with the Securities and Exchange Commission.