Endo International plc ENDP announced that Par Pharmaceutical has received final approval from the FDA regarding its New Drug Application (NDA) for ephedrine sulfate injection. Ephedrine sulfate is administered parenterally as a pressor agent to address clinically important hypotension in surgical settings.
Shares of Endo have underperformed the Zacks classified Medical-Drugs industry in the past one year. Specifically, the stock returned 79.2% during this period in comparison to industry’s loss of 10.1%.
Endo acquired the privately held Par Pharmaceutical from TPG, for a total consideration of $8.05 billion in Sep 2015. Endo’s generics portfolio and pipeline were augmented by the acquisition, as Par Pharma’s portfolio included approximately 100 products. Along with the acquisition the company also implemented cost-rationalization and integration initiatives in order to capture operating synergies and generate cost savings.
Earlier in the month, the company announced that it has begun restructuring its corporate and branded pharmaceutical R&D functions in Malvern, PA and Chestnut Ridge, NY. The initiative aims to better align the corporate and branded pharmaceutical R&D functions in size and scope with the recently restructured generics and branded pharmaceutical business units in the U.S.
These initiatives are expected to provide greater efficiencies and corresponding cost savings. These restructuring actions are likely to reduce the company’s headcount by approximately 90 full-time positions and result in pre-tax cost savings of $40 million to $50 million on an annual run rate basis by the fourth quarter of 2017.
We remind investors that Endo completed the integration, product portfolio rationalization and restructuring of its generics business segment in 2016. Thereafter, Endo introduced a unified operating model that streamlined its global supply chain organization to boost its Branded and Generics businesses. The company has eliminated its pain field sales force in the branded segment in the U.S.
We note that the company’s generic segment is under pressure given the challenging competitive landscape and pricing pressures. Consequently, Endo expects to invest a portion of these cost savings in the company's core product franchises and new product development programs for both the branded and generics business segments.
Zacks Rank & Key Picks
Endo currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the health care sector include Sunesis Pharmaceuticals, Inc. SNSS, Enzo Biochem, Inc. ENZ, and Anika Therapeutics Inc. ANIK. While Sunesis sports a Zacks Rank #1 (Strong Buy), Enzo Biochem and Anika carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Enz Biochem’s loss estimates for 2017 narrowed 5.88% over the past 60 days. The company recorded a positive earnings surprise in three of the last four quarters, the average being 22.50%. Its share price was up 42% in the past one year.
Anika’s earnings estimates for 2016 and 2017 were up 3.9% and 0.5%, respectively, over the last 60 days. The company recorded a positive earnings surprise in each of the last four quarters, the average being 33.14%. Its share price was up 33.1% in the past one year.
Sunesis’ loss estimates narrowed 5.06% and 8.80% for 2016 and 2017, respectively, over the past 60 days. The company recorded a positive earnings surprise in three of the last four quarters, the average being 0.54%.
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