No need to shed tears for Allergan with a market cap of nearly $18 billion last week.

Allergan Inc. Chief Executive David Pyott is guarded about 2010 as the drug maker faces competition, uncertain spending on its medical cosmetics and a relatively quiet year for product launches.

“It’s sensible to remain conservative in our forecast given there are still a number of challenges to be accounted for,” Pyott said. “You need to think about 2010 potentially being the most challenging of the coming years.”

For most of the last decade, Allergan played offense.

The Irvine-based drug maker was fueled by its $3 billion 2006 buy of Santa Barbara medical cosmetic maker Inamed Corp. and big product rollouts, including Botox Cosmetic in 2002 and eyelash growth drug Latisse at the end of 2008.

This year, Allergan is in more of a defensive mode, with worries about a slow economic recovery and its impact on medical cosmetics spending, expected generic competition for a key eye drug and the first full year of sales for Botox’s only rival.

Allergan gave a guarded outlook for the current quarter and 2010 earlier this month. The forecast was cautious even by the standards of Pyott, known for underpromising and overdelivering.

The company said it expected a profit of $174.3 million to $180.4 million for the first quarter, well below the $186 million analysts had been looking for on average.

The drug maker projected first-quarter product sales (slightly less than total sales) of $1.06 billion to $1.1 billion. On average, analysts had been expecting sales to come in at $1.11 billion.

For all of 2010, Allergan forecasts a profit of $944.9 million to $963.3 million, in line with analysts’ average expectation of $960.2 million.

2010 product sales are pegged at $4.55 billion to $4.75 billion, below the $4.78 billion Wall Street had been forecasting.

The 2010 outlook “didn’t have quite the upside to our forecast that we hoped,” said Gary Nachman, an analyst with Boston-based Leerink Swann LLC, in a research note.

Allergan’s shares briefly slumped after its forecast before rebounding, which “strongly suggests investors expect better results than those Allergan has projected,” Aaron Gal, an analyst for New York-based Sanford C. Bernstein & Co., told Reuters.

Allergan had a market value of nearly $18 billion last week.

Via Orange County Business Journal