Any long-term investor will tell you that even good stocks suffer setbacks. 

One firm that had a tough year in 2016 was Allergan (AGN - Get Report) . But the company already looks to be rebounding. That is largely because it has a number of powerhouse products and a pipeline of potential blockbusters. It has also made two key acquisitions over the past five months that could help its product development. This combination is more than likely to offset its failure to close a merger with Pfizer

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Allergan had enjoyed a long string of successful products in a variety of markets when it caught Pfizer's eye. In late 2015, the companies agreed to a deal in which Pfizer would acquire Allergan for $150 billion.  

But then the U.S. Treasury changed the rules about so-called "inversion deals," which involved companies moving their headquarters to other countries to reduce their tax burden. Under terms of the acquisition, Pfizer would have moved its headquarters to Allergan's home in Dublin. 

When the Pfizer deal fell apart, Allergan missed its earnings target, and the stock, which had traded as high as 300 a year ago, lost about a third of its value over the course of 2016.

Meanwhile, health care policy is up for grabs. The Republican Congress is already laying the groundwork to junk Obamacare, although the promised plan to "replace" it is nowhere in sight.

Donald Trump said over the weekend that he has a plan to provide insurance for all Americans, but as The New York Times noted, he "provided no details about how his plan would work or what it would cost," and also "offered no explanation of how he would persuade Congress to pass his plan."

But even with all this uncertainty, Allergan's stock price has begun to rebound. Analysts are pleased with the new strategy coming from Allergan's top managers, which emphasizes a balanced mix of new product launches, international expansion and growth from key products.

The company's Restasis product, for people who suffer from dry eyes, remains the leader in its market. As part of its reorientation mission, Allergan sold off its generic drug business to Teva Pharmaceutical Industries for $33.4 billion in cash and $5.4 billion in Teva stock. That capital is now being plowed into research and development.

The company has also announced plans to purchase regenerative medicine company LifeCell for $2.9 billion in cash. Another potential growth area is the acquisition of Vitae Pharmaceuticals, a clinical stage biotech that has made breakthroughs in treating moderate-to-severe psoriasis a common skin malady.

Allergan has six therapies currently in phase three development -- where drugs move from laboratory testing to clinical trials with human subjects. These have the potential to generate sales of up to $13 billion, CEO Brent Saunders told investors in a recent conference call.

Can Allergan come back? While some readjustment was called for after the Pfizer deal fell through, a one-third drop in market value was excessive. The stock's price-earnings ratio is now just 6 -- absurdly low for a drug company with several popular products and several more in the pipeline.

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Tom Scarlett is an independent contributor who at the time of publication owned none of the stocks mentioned.