In Otherwise Strong Year, Endo International Shutters Astora Women’s Health Unit Over Ongoing Litigation Risk
March 1, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Dublin-based Endo International plc , as part of its fourth quarter and full year financial report yesterday, indicated it was closing its Astora Women’s Health Unit due to significant litigation.
In 2011, Endo acquired American Medical Systems Holding Inc., which focuses on urology products. It changed its American Medical Systems’ Women’s Health division name to Astora Women’s Health. One of its products is vaginal mesh, which is used to treat pelvic organ prolapse in addition to urinary incontinence. However, the products have led to numerous law suits related to injuries from the products.
At one point, because of more claims then expected, Endo increased its product liability accrual connected to the cases by $834 million. Then, in August 2015, it set aside $1.53 billion for the cases.
The U.S. Food and Drug Administration (FDA) has also indicated it would make the regulations for the vaginal mesh products stricture. They would be reclassified from moderate-risk medical devices to high-risk medical devices. It would also force manufacturers to submit information in support of the devices’ effectiveness and safety.
About a year ago, Endo decided to sell Astora. The company has indicated that although it did receive formal bids for the division, it decided that because of the potential for future liability related to the mesh implants, it was instead going to shutter operations.
In 2015, Endo also divested its AMS Men’s Health business. It expects to end Astora operations by March 31, 2016. Nothing specific has been stated regarding job losses as a result.
As part of its financial disclosures, Endo indicated total revenues for 2015 were $3.27 billion, up 37 percent from 2014’s $2.38 billion. However, operational losses were higher, with $300.4 million in losses reported in 2015, while in 2014 it reported $61.6 million in income from continuing operations.
For its 2016 guidance, the company projects total revenues between $4.32 billion and $4.52 billion. The company also reported that it had gained a $997 million tax benefit mostly related to a worthless stock deduction connected to the mesh product liability losses.
“Endo delivered solid financial results this quarter and was further strengthened by our first full quarter of revenues from the acquisition of Par Pharmaceutical Holdings, Inc., “ said Rajiv De Silva, president and chief executive officer of Endo, in a statement. “As we enter 2016, we believe our business is diversified and positioned for double-digit underlying growth over the mid- to long-term. Moving forward, we are focused on operational execution—especially on the integration of Par and on supporting growth for priority branded products such as Xiaflex and Belbuca—and continuing to create value for Endo shareholders.”
Endo acquired Par Pharmaceuticals for $8 billion in May, 2015. The deal will add almost 100 products to the company’s portfolio, including several expensive injectable drugs. Endo already has a portfolio of more than 700 generic drugs.