In a bid to strengthen its generics portfolio,
) has inked a deal to buy privately held DAVA Pharmaceuticals for a
cash consideration of approximately $575 million. The deal is
expected to close in the latter half of the year.
The value might go up by $25 million in the event of the
achievement of certain sales milestones. Shares of Endo were
positively impacted by the news. The DAVA acquisition should be
immediately accretive following its closure and boost Endo's 2014
Boost to Generics Unit
Endo's generics unit will be boosted by the addition of 13 marketed
products from DAVA. The generics pipeline at Endo will also be
strengthened in the event of the DAVA deal going through. More than
five generic offerings from DAVA are expected to hit the market in
2015. In view of such a promising outlook, Endo's decision to take
over DAVA seems to be a prudent move.
Endo is looking to augment its generics business through
acquisitions. The segment recorded sales of $212 million in the
first quarter, up 19% year over year. If the DAVA deal goes
through, it would be the second major buy at Endo after the Feb
2014 purchase of Boca Pharmacal to strengthen its generics unit.
An Offset for Falling Painkiller Sales
Endo's painkillers - Lidoderm and Opana ER - have been experiencing
declining sales due to generic competition. In the first quarter of
2014, revenues came in at $594.6 million, down 10% primarily due to
lower sales of Lidoderm (down 82%) and Opana ER (down 17%).
) have launched their generic versions of the drugs. The decision
to acquire DAVA is aimed at combating dwindling sales from generic
competition of key products.
Endo carries a Zacks Rank #3 (Hold). Better-ranked stocks in the
healthcare sector include
). Both the stocks carry a Zacks Rank #1 (Strong Buy).
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ENDO INTL PLC (ENDP): Free Stock Analysis
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