Endo Health Solutions Inc.
) reached a resolution of criminal and civil claims with the
federal and relevant state authorities and the district of
Columbia pertaining to the illegal marketing of the company's
painkiller Lidoderm. Endo will have to shell out payments upto
$194 million to settle the dispute. Endo had already set aside
the amount to cover the penalties on Lidoderm.
Under the settlement agreement, the company inked a Deferred
Prosecution Agreement (DPA) with the United States Department of
Justice. The duration of the DPA is up to 2 years and 6 months.
In a further bid to settle the dispute, Endo entered into a
Corporate Integrity Agreement (CIA) with the United States
Department of Health and Human Services, Office of Inspector
General. The agreement spans 5 years.
We note that Lidoderm has been facing declining sales of late
due to generic competition from companies like
). However, allegations of illegal Lidoderm marketing are quite
old. In those days, Lidoderm was a chief contributor to Endo's
total revenues. The resolution of the governmental investigation
on the unlawful marketing of Lidoderm by the company is a relief
for Endo and helped the stock reach a 52-week high of $78.64 on
Feb 21, 2014.
Though pleased with the settlement on Lidoderm, we believe
investor focus will remain on Endo's impending Canadian specialty
pharmaceutical company, Paladin Labs Inc. Endo has been looking
to combat the declining sales of its key drugs like Lidoderm and
Opana ER by making acquisitions/signing deals. Opana ER sales
have also declined in recent quarters due to generic competition
from companies like
Endo carries a Zacks Rank #3 (Hold).
Auxilium Pharmaceuticals Inc.
) is a better-ranked stock with a Zacks Rank #1 (Strong Buy).
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ENDO PHARMACEUT (ENDP): Free Stock Analysis
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