Exclusive: Speciality drugmaker Endo explores asset sales - sources

By Carl O'Donnell and Greg Roumeliotis

(Reuters) - Speciality pharmaceutical company Endo International Plc has held discussions with private equity firms about potential asset sales as it seeks to reduce its more than $8 billion debt pile, according to people familiar with the matter.

The move underscores the challenges facing the Dublin-based company, which has seen its shares drop 77 percent this year amid investor concerns that downward pressure on drug prices could upend its acquisition-driven business model.

Endo, which has a market capitalization of $3 billion, has been exploring several options, including an asset swap with another company, one of the people said. The discussions are at an early stage and no transaction may occur, the people cautioned.

 

The sources asked not to be identified because the deliberations are confidential. Endo declined to comment.

Endo offers a suite of speciality, generic and over-the-counter medical products spanning therapeutic areas including pain, urology and endocrinology.

The company cut its 2016 earnings guidance in May, fuelling concerns about mounting pressure on its drug prices from payers and regulators.

In April, Reuters reported that another major acquisitive speciality pharmaceutical company, Valeant Pharmaceuticals International Plc , was also reviewing asset sales as it too struggled with high debt and downward pressure on its drug prices.

Valeant became a poster child for perceived flaws in the business model of speciality pharmaceutical companies, as it came under intense scrutiny from politicians and regulators for its reliance on acquisitions and price hikes to juice growth.

Over the past several years, Endo has employed a similar model of acquisition-led growth under Chief Executive Rajeev Da Silva, who was previously a top executive at Valeant.

Among its most prominent deals was its $8 billion acquisition last year of Par Pharmaceuticals, which was previously owned by private equity firm TPG Capital. Par Pharmaceuticals is now Endo's generic drug and over-the-counter medication arm.

TPG retains a roughly 10 percent stake in Endo, making it the company's largest shareholder. TPG declined to comment.

Last year, Perrigo Co Plc , the Irish-based generic drugmaker which at the time was trying to fend off a hostile bid by Mylan NV , held unsuccessful talks to acquire Endo in an all-stock deal, sources said at the time.

Perrigo ended the talks when Endo asked for too much stock for its shareholders, representing a larger premium than what Perrigo was willing to offer, the people said.

(Reporting by Carl O'Donnell and Greg Roumeliotis in New York; Editing by Phil Berlowitz)