Endo Health Solutions is based in Malvern, but the ground under the pharmaceutical and medical device company is shifting by the day.
The most solid aspect of the business spinning out of last week's earnings announcement seemed to be the low-profile generic division called Qualitest. With the brand-name drug unit and medical devices, legal and regulatory challenges are adding to the typical dilemma of generic competition.
On June 5, the company said it would cut 15 percent of its workforce, so when chief executive officer Rajiv De Silva said there would be no more immediate cuts, that was the good news, at least for employees.
For those looking for profits, the next few months could be rocky, with no sure sign of success in the future.
Endo's best-selling drug is the Lidoderm patch, which relieves pain, but its sales fell to $416.7 million in the first half of 2013, 5 percent less than the same period in 2012. Sales are likely to slip more starting Sept. 15, when Actavis is likely to launch a generic version, with another competitor likely in 2014.
"The Lidoderm situation will unfold very soon," De Silva said. "We do expect Actavis to launch its generic in mid-September and that could lead to a 30 percent decline in net sales. A second generic we anticipate in the first half of 2014 could result in a 20 percent decline of net sales."
Late in 2012, Endo said it struck a tentative agreement with the U.S. Justice Department in which it would pay $194 million to settle allegations of wrongdoing in the promotion of Lidoderm. Endo applied that amount to its books in 2012, but the deal is not final.
Opana ER is Endo's second-best-selling drug, but revenue declined 35 percent in the first half of 2013 to $114.3 million. Opana has several issues. The drug is an opioid painkiller, meaning it is highly addictive for many patients and, thus, prone to abuse. Non-suicidal overdose deaths have surpassed those caused by cocaine and heroin.
To help with the problem, the FDA has encouraged manufacturers to create formulations that are difficult to crush and therefore smoke or inhale by abusers. Such formulations can bring patent protection or market exclusivity. Endo tried that, but FDA officials said the new version did not meet the new threshold and was done for commercial, not safety, reasons. On the other hand, Endo's generic division is working toward selling a different opioid painkiller.
Endo's problems with its American Medical Systems device unit took another negative turn on profitability. De Silva said the lawsuits by women claiming harm from the company's vaginal mesh implants have increased from 7,700 in March to about 13,500. The federal lawsuits have been consolidated in the southern district of West Virginia and the first trial starts in December.