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January 26, 2017

Endo Axing 90 Employees in Restructuring

  • Endo International said today it will eliminate 90 full-time positions in a restructuring designed to lower costs, increase efficiency—and bring the company back into the black following recent losses and a plunge in its stock price.

    Endo said its restructuring would primarily affect its corporate and branded pharmaceutical R&D operations at its U.S. headquarters in Malvern, PA, as well as in Chestnut Ridge, NY, where Par Pharmaceutical was headquartered until it was acquired by Endo in 2015.

    The restructuring, Endo said, was intended to better align those operations with its recently restructured Generics and U.S Branded Pharmaceutical business segments.

    Endo acknowledged that it will incur approximately $15 million to $20 million in cash charges related to the restructuring—but expects to generate approximately $40 million to $50 million in annual pretax cost savings by the fourth quarter.

    The company added that it expects to spend part of these cost savings in its core product franchises and new product development programs for both the Branded and Generics segments.

    “In a competitive and challenging healthcare environment, these difficult but necessary steps are intended to best position Endo for long-term success,” Endo president and CEO Paul V. Campanelli said in a statement. “These actions will serve to strengthen our Company and permit us to provide additional support for our core franchises and development programs.”

    In recent months, Endo completed a restructuring of its generics unit and in October streamlined its Global Supply Chain organization with the goal of better supporting the Branded and Generics businesses. The company also eliminated its field sales force for U.S. Branded pain drugs, and realigned the rest of the unit’s operations, while refocusing the branded segment on its specialty drug business.

    Today’s announced restructuring comes 4 months after Campanelli was promoted to his current position from president of Par Pharmaceutical, now Endo's generic and OTC drugs business, which accounted for approximately 60% of Endo's total revenues through the first half of 2016.

    During the third quarter of 2016, Endo shrunk its net loss from continuing operations to $191.496 million from $803.706 million from the year-ago quarter, while revenues rose 18.6% year-over-year to $884.335 million, reflecting the addition of sales from Par Pharmaceutical, which Endo acquired in 2015.

    Over the first 9 months of 2017, Endo racked up $109.553 million in income from continuing operations, an improvement over the $744.108 million continuing-operations loss recorded during January–September 2015.

    One key factor in the losses: Endo has laid out more than $1 billion pretax since 2015 to settle lawsuits related to its vaginal mesh implants for pelvic organ prolapse “and other litigation matters”—$931.496 million in January–September 2016, nearly double the $525.875 million shelled out during Q1–Q3 2015. In March, Endo shut down its Astora Women’s Health unit after it was unable to find a buyer

    Just this week, Endo moved to resolve another controversy by settling U.S. Federal Trade Commission charges that the company entered into illegal “pay-for-delay” patent infringement settlements intended to block lower-cost generic versions of its two top-selling drugs, Opana® ER (oxymorphone hydrochloride extended release) and Lidoderm® (lidocaine patch 5%). Endo will pay no fines and admit no wrongdoing under an agreement with the FTC.

    Over the past year Endo’s shares have plunged 79% to $11.89 at the closing of trading yesterday from $57.84 on January 25, 2016. 

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