In a bid to establish its presence in the highly sought after
Indian market, US based
Endo Health Solutions Inc.
) recently inked a deal with GVK Biosciences., Based in India,
GVK Biosciences is Asia's leading drug discovery research and
development contract research organization.
As per the terms of the deal, the Indian company will be
responsible for the delivery of a clinical candidate by utilizing
its discovery expertise. Endo Health will be responsible for
developing and commercializing the above candidate. GVK
Biosciences stated in its press release that the deal emanated
from its newly launched concept-Early Discovery Assets.
We note that Endo Health is going through a rough patch. In Jan
2013, the company issued a lackluster 2013 guidance. Endo Health
announced that it expects to end 2013 with adjusted earnings in
the range of $4.40 -$4.70 per share (old guidance: $5.20-$5.40
We believe that the entry of a generic competitor,
), for Endo Health's lead drug Lidoderm in Sept 2013 is primarily
responsible for the disappointing guidance. Moreover, another key
drug at Endo Health, Opana ER is already facing generic
competition. Generic threat looms over many other key drugs at
We believe that Endo Health is targeting the high potential
Indian "emerging" market through this deal to combat the above
mentioned challenges. Emerging markets are gradually gaining more
importance and several companies are now shifting their focus on
these areas. According to the IMS Institute, spending on
medicines in "pharmerging" markets will almost double to $345
billion - $375 billion in five years from $194 billion in 2011.
Endo Health currently carries a Zacks Rank #5 (Strong Sell). Not
all stocks are performing as poorly as Endo Health. Favorably
placed pharma stocks include
). Both companies carry a Zacks Rank #1 (Strong Buy).
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