Endo talks pricing, generics market turmoil
- Endo Pharmaceuticals saw generics sales slip during the third quarter due, in part, to a challenging pricing environment that the Malvern, PA-based company doesn't anticipate letting up in 2017.
- While revenues from Endo's U.S. generics business rose 45% compared to the same period last year – bolstered by pickups from the company's acquisition of Par Pharmaceuticals – they were down 5% from the second quarter of 2016. In particular, the company's generics base division, which includes all solid oral and pain control products, declined about 20% year-over-year.
- "The U.S. generics competitive landscape and pricing pressures continue to be challenging," Endo CEO Paul Campanelli said in a Tuesday earnings call. The company expects the copycats' revenue to erode further, citing "stronger headwinds on the front as we exit the year."
Generics are Endo's keystone, with U.S. sales accounting for more than 60% of the company's $884 million in revenue from the third quarter. As such, executives tried to quell investor concerns about the negative effects pricing burdens and competition from other generics could have on future earnings.
"Despite some headwinds for our generic space business, the overall diversity of our portfolio did enable us to deliver solid revenue and adjusted earnings-per-share results in the third quarter with revenue performance across all business units, broadly in line, or ahead of company expectations," Campanelli said in the November 8 call.
To that end, the company showed strong gains in its two other generics arms: injectables and new and alternative dosages, which covers liquid, powder, semi-solid and spray drugs, among others. The categories brought in $270 million together.
Endo did not comment on the ongoing Justice Department antitrust investigation into its drug pricing decisions. The department probed for almost two years in search of price collusion among generics makers, and most recently hit Endo, along with a dozen or so others, with subpoenas relating to the investigation.
The company did give insight into the its strategy, however, stating that it will continue to use the 505(b)(2) pathway to push drugs through the regulatory system. The pathway works by allowing generics makers to rely on already conducted safety and efficacy trials of the active pharmaceutical ingredient to avoid duplicating clinical trials.
"When you look at portfolios that are historically in either the injectable portfolio, or even some of the legacy Par brands that have shifted over to Endo, those are pure 505(b)(2)s," Campanelli said. "And we have the resources and the R&D to continue to develop those products."
- Endo Statement
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