Endo Pharmaceuticals Continues Expansion With $8.05 Billion Acquisition of Par Pharma

Published: May 18, 2015

Endo Pharmaceuticals Continues Expansion With $8.05 Billion Acquisition of Par Pharma
May 18, 2015
By Alex Keown and Riley McDermid, BioSpace.com Breaking News Staff

DUBLIN – Endo International PLC , the maker of anti-pain medication Percocet, plopped down $8.05 billion to acquire privately-held Par Pharmaceutical Holdings to spur sales growth in generic medications. The deal with Par is the latest in an aggressive growth model through acquisitions for Endo.

Rajiv De Silva, Endo’s chief executive officer and the architect of the growth model, said Qualitest, Endo’s generics arm, is an effective growth driver for Endo.

“This transaction with Par builds upon our generics growth, adding a strong portfolio of high barrier-to-entry and attractive gross margin products while also transforming Endo, creating a powerful corporate platform for future growth and strategic M&A,” De Silva said in a statement.

Endo acquired Par from TPG Capital North America, which took the pharmaceutical company private in 2012, Fox Business reported.

The acquisition of Par brings approximately 100 products in multiple dosage forms and delivery systems, including oral solids, oral suspensions, injectables and high barrier-to-entry products. Additionally the deal brings more than 200 Abbreviated New Drug Applications, 115 of which were filed with the U.S. Food and Drug Administration (FDA) as of December 31, 2014, Endo said in a statement.

Endo said it estimated operational and tax savings of $175 million in the first 12 months after the purchase. The acquisition will also preserve investments in the company’s research and development pipeline “to help drive long-term organic growth,” the company said. The deal with Par is expected to be finalized in the second half of 2015. Paul Campanelli, chief executive officer of Par Pharmaceutical, Inc., is expected to join Endo to run the generic drug business and also take a seat on the company board of directors.

Following news of the deal, Endo’s stock (ENDP) was trading at $83.21 this morning, down from its close of $85.36 per share.

The deal is the latest in a string of acquisitions that is allowing Endo to aggressively expand its product portfolio. Earlier this month Endo spent a $130 million deal to acquire a large portfolio of anti-pain anti-infectives, cardiovascular and other therapeutics areas from Aspen Holdings. The deal includes products that are currently on the market, as well as drug therapies that are currently in developmental stages, the company said. Endo acquired 60 on-market products and nearly 70 pipeline programs in research phases. Last year the approved products acquired from Aspen generated $28 million in revenue. In January Endo acquired Auxilium Pharmaceuticals for $2.6 billion.

That transaction broadened Endo’s offerings of urological and orthopedic therapies, including Xiaflex, Testopel and Stendra. The Auxilium deal came on the heels of deals to buy Boca Pharmacal and DAVA Pharmaceuticals. The latter two deals helped push Endo’s sales of generic drugs in the first quarter of 2015 by 68 percent. Generic sales totaled $357 million during the first quarter.

In March Endo lost out on acquiring Salix Pharmaceuticals, Ltd. . The company offered North Carolina-based Salix, the maker of Xifaxan, a drug used to treat traveler’s diarrhea, $175 per share in cash and stock, about $11.2 billion. The tug of war for the acquisition of Salix Pharmaceuticals, Ltd. (SLXP) ended in mid-March, after Valeant Pharmaceuticals International, Inc. said it would sweeten its bid for Salix and increase it from $158 per share to $173 in cash, more than Endo’s offer, which had dropped in value to $172.56 per share. Salix said in a statement it had accepted the new Valeant offer and Endo said early March 16 that it had officially withdrawn its own bid.

Thomson Reuters reported that the winning Valeant offer is based on Salix's 63.33 million shares outstanding as of Feb. 23 and gives the company an enterprise value of about $15.8 billion.

"While we are disappointed with this outcome, we have been and will continue to be disciplined in our approach to potential acquisitions. We would like to wish Salix and Valeant continued success as they move forward with their transaction,” said Endo in its statement at the time. “As a next step, Endo is focusing our attention on other opportunities in our robust deal pipeline and on maximizing our organic growth initiatives including progressing our R&D pipeline. We will continue to drive Endo's growth as a global leader in specialty pharmaceuticals and look forward to creating value for our shareholders while improving patients' lives."

Still, the company has other bright spots in its portfolio. In March Endo launched NATESTO (testosterone nasal gel), a nasal gel for testosterone replacement therapy in adult males diagnosed with hypogonadism. The drug was approved by the Food and Drug Administration in 2014. Endo acquired the rights to NATESTO in the U.S. and Mexico from Trimel BioPharma SRL, a subsidiary of Trimel Pharmaceuticals Corporation, for $25 million plus milestone payments.

Endo’s growth-through-acquisition plan is part of a recent trend in the pharmaceutical and biotech industries that has included major deals such as Pfizer Inc. ’s $16 billion agreement to acquire Illinois-based Hospira, Inc..

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