Actavis, Inc. (ACT) recently announced the receipt of U.S. Food and Drug Administration (FDA) approval for its generic version of Endo Health Solutions' (ENDP) Opana ER (oxymorphone hydrochloride extended-release tablets) 5 mg, 10 mg, 20 mg, 30 mg and 40 mg.
We note that Actavis is already marketing its generic version of the 7.5 mg and 15 mg dosage strengths of Opana ER.
Opana ER, an opioid agonist, is approved for the relief of moderate to severe pain in patients requiring continuous around-the-clock opioid treatment for an extended period of time. According to IMS Health, Opana ER sales in the U.S. for the 12 months ended May 31, 2013, were about $461 million.
Currently, Actavis is facing a patent infringement lawsuit regarding the sale of its generic versions of the 7.5 mg and 15 mg dosages of Opana ER. Endo had filed the lawsuit in Dec 2012. Actavis is yet to fix its launch plans for the newly approved dosage strengths.
Actavis currently carries a Zacks Rank #3 (Hold). The company is looking to acquire Warner Chilcott plc (WCRX) in a stock-for-stock transaction, worth about $8.5 billion, including the assumption of Warner Chilcott’s net debt of $3.4 billion.
The successful completion of this deal will lead to the creation of a leading global specialty pharmaceutical company with combined annual revenues of about $11 billion. The combined company will hold the third position in the U.S. specialty pharmaceutical market with annual revenues of about $3 billion.
We are positive on this deal which makes strategic and financial sense. The deal is expected to be immediately accretive. Moreover, it will provide strong operating cash flow and allow Actavis to de-lever its balance sheet. The tax rate will also be significantly below current levels.
While Actavis currently carries a Zacks Rank #3 (Hold), Warner Chilcott is a Zacks Rank #2 (Buy) stock.
Other companies that currently look well-positioned include Mylan, Inc. (MYL), which is a Zacks Rank #2 stock.
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