September 23, 2016 / 3:22 PM / 2 years ago

Endo International CEO steps down, Campanelli named successor

(Reuters) - Endo International Plc (ENDP.O) said Chief Executive Rajiv De Silva had stepped down and would be replaced by generics division head Paul Campanelli, as the drugmaker grapples with a large debt load and mounting pressure on some of its drug prices.

Endo’s shares rose as much as 18 percent to $23.98 on Friday as the company also maintained its full-year profit and revenue forecasts.

Campanelli joined Endo in 2015 following the company’s $8-billion acquisition of generic drugs maker Par Pharmaceutical, where he was CEO since 2012.

At Endo, Campanelli headed the generic and OTC drugs business, which accounted for about 60 percent of the company’s total revenue through the first half of 2016.

Under De Silva, a former senior executive at Valeant Pharmaceuticals International Inc VRX.TO, Endo embarked on a strategy of acquisition-fueled growth, drawing comparisons with the Canadian drugmaker.

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

Analysts said Campanelli’s appointment underscores the growing importance of Endo’s generics business, adding that the transition could mark a shift in focus to operational execution from acquisition-led growth.

“The news doesn’t come as a surprise given Endo’s stock performance and strategic shift toward a generic-focused portfolio,” Leerink Partners analyst Jason Gerberry wrote in a client note.

Up to Thursday’s close of $20.26, Endo’s shares had lost about 67 percent this year - the worst performer on the S&P 500 healthcare index .SPXHC.

Reuters reported in June that Endo had held discussions with private equity firms about potential asset sales to reduce its more than $8 billion debt pile.

Mizuho analyst Irina Koffler said the management’s increased focus on differentiated assets rather than on growing scale is likely to make Endo more attractive to strategic buyers and could result in additional divestitures.

“We continue to believe that Endo may be restructured and eventually sold to a larger generic player, which may be easier to achieve under new management,” Koffler said.

Endo, which offers a suite of specialty, generic and over-the-counter medical products, is also being investigated for its relationships with pharmacy benefit managers and marketing of its opioid painkiller Opana ER.

The company agreed in March to stop marketing Opana ER pill as crush-resistant and stop downplaying the risks of addiction associated with the narcotic.

Endo’s shares were up 15.3 percent at $23.35 on Friday.

Reporting by Ankur Banerjee in Bengaluru; Editing by Saumyadeb Chakrabarty and Shounak Dasgupta

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