Endo Axing 700; Seeks Buyers for HealthTronics, Early-Stage Platform
Endo Health Solutions will eliminate 15% of its workforce or some 700 jobs worldwide, seek more acquisitions, pursue buyers for its HealthTronics urological business and branded pharmaceutical early-stage discovery platform, and restructure its R&D effort.
The restructuring actions all come less than a month after FDA rejected Endo’s citizen petition aimed at stopping a generic version of its Opana ER® (oxymorphone HCl) moderate-to-severe pain drug from reaching the market, and sent the company a complete response letter expected to delay its third try at approval for its long-acting testosterone undecanoate injection Aveed. Endo disclosed FDA’s action on Aveed a day after saying that two top executives were leaving the company, COO Julie H. McHugh and Alan G. Levin, evp and CFO.
Endo hopes the moves will better position it for looming generic competition for Opana ER as well as the local anesthetic Lidoderm (lidocaine topical) for post-shingles pain.
"The changes we are announcing today are designed to bring sharper focus to Endo's strategic growth priorities while right-sizing the organization. We believe these actions will leave Endo with the right cost structure, leadership, and execution capabilities to drive sustainable cash flow and earnings growth over time,” Endo CEO Rajiv De Silva said yesterday in a statement.
In that statement, the company also said it “will continue to evaluate the performance of its remaining businesses so that their respective cash flows and returns are consistent with Endo's investment criteria.”
Endo said it was committing itself to three areas of focus:
Qualitest: The company said it will grow its Qualitest generic drug business of more than 600 products, targeting “low-risk, high-return opportunities” by capitalizing on what it called encouraging demand for its portfolio of controlled substances and liquids, as well as more effective R&D investment.
Branded Pharmaceuticals: Endo committed itself to increasing profitability from its mature brands while investing in what it considers key late-stage pipeline opportunities.
American Medical Systems: The company said it will enhance demand for its urology products and services in attractive growth markets.
Endo also said it was committed, going forward, to improving its R&D efficiency and effectiveness, with a focus on enhancing its development capabilities and near-term revenue generating assets, pursuing accretive acquisitions, and attracting and retaining talent.
Endo projected the job cuts and other spending reductions will generate some $325 million in annual cost savings when fully implemented by mid-2014. About $150 million of that is expected to be realized this year, including approximately $60 million the company expects to spend in severance payments and other charges.
The company lowered its revenue and earnings-per-share guidance to investors. Endo now says it expects annual revenue this year of between $2.65 billion and $2.80 billion, down 5% from its original range of $2.80 to $2.95 billion.