Actavis, Inc. (ACT) recently launched its generic version of Endo Health Solutions' (ENDP) Lidoderm (lidocaine topical patch 5%). Actavis’ generic version was launched under an exclusive settlement agreement with Endo and and Teikoku Seiyaku Co., Ltd. The companies had entered into a settlement agreement in May 2012.
Lidoderm is used for the relief of post-shingles pain and generated U.S. sales of $1.4 billion for the twelve months ending May 31, 2013, as per IMS Health Data. The generic Lidoderm launch is an important launch for the company – Actavis believes it is entitled to 180-days exclusivity under the Hatch Waxman Act.
Actavis launched its generic version of another product as well – Endo’s Opana ER (oxymorphone hydrochloride extended-release tablets, 5 mg, 10 mg, 20 mg, 30 mg and 40 mg). The company had gained FDA approval for these dosages in Jul 2013. We note that Actavis was 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 Opana ER.
Actavis is a Zacks Rank #2 (Buy) stock. Earlier this year, Actavis had announced its intention to acquire Warner Chilcott (WCRX). We are positive on this deal which makes strategic and financial sense. The deal, which is scheduled to close early in the fourth quarter, 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.
Other companies doing well include Supernus Pharmaceuticals, Inc. (SUPN), a Zacks Rank #1 (Strong Buy) stock.
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