Endo Pharmaceuticals has entered into an agreement to buy generic drug maker Qualitest Pharmaceuticals for about $1.2 billion in cash.

Endo Pharmaceuticals, Qualitest, generic drugs, acquisition, pharmaceuticals, David Holveck, Marvin Samson, Julie McHugh, pain management products

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Endo unveils deal to acquire Qualitest

September 28th, 2010

CHADDS FORD, Pa. – Endo Pharmaceuticals has entered into an agreement to buy generic drug maker Qualitest Pharmaceuticals for about $1.2 billion in cash.

Endo said Tuesday that the combined company will deliver more comprehensive health care solutions across its businesses in branded pharmaceuticals, generics, devices and services in key therapeutic areas including pain and urology.

Qualitest, the sixth-largest U.S. generics company as measured by prescriptions filled, is focused on cost competitive, high-quality manufactured products with high barriers to entry, according to Endo. Qualitest has cGMP facilities in the United States including the ability to manufacture controlled substances, which make up about 40% of its product portfolio, and liquids, which are roughly 17% of its portfolio.

The company brings a broad range of generics to Endo, encompassing 175 product families. Thirty-two of Qualitest's products are listed among the top 250 generics by total prescription volume, Endo reported. In addition, the combined company will have an extensive pipeline of abbreviated new drug applications (ANDAs), with 46 ANDAs under active Food and Drug Administration review in multiple therapeutic areas, including pain, urology, CNS, oncology and hypertension.

Endo said it believes Qualitest brings critical mass to Endo's current generics business, further diversifies its business lines and product offerings and enhances Endo's portfolio of pain management products.

"The acquisition of Qualitest accelerates our stated strategy of building a diversified health care company, better able to respond to the changing economics that drive the U.S. health care environment," stated David Holveck, president and chief executive officer of Endo. "We believe that this transaction will accelerate and diversify our revenues and earnings streams while also providing our partners in the industry with a wider range of products and services at multiple value points.

"The transaction provides Endo with an enhanced competitive position and critical mass in the generics market and when combined with our growing branded pharmaceuticals and devices and services businesses, makes us a more comprehensive health care solutions provider," Holveck added. "Together, we will be well-positioned to strengthen our relationships with physicians and payment providers to deliver better outcomes for patients and to meet the demands of the evolving health care system in the U.S."

In addition, with more than 90% of all pain prescriptions now filled by generic drugs in the $15 billion U.S. pain market, the acquisition of Qualitest is a key step to Endo remaining at the forefront of providing pain solutions to its customers, the company noted. About 40% of Qualitest's revenue is derived from pain products, making the acquisition a natural extension of Endo's competitive position in pain and controlled substances, Endo said.

Under the agreement, which has been unanimously approved by Endo's board, Endo will acquire 100% of Qualitest for a total cash consideration of $1.2 billion. Pending regulatory review, the company expects the deal to close late in the fourth quarter of 2010 or early in the first quarter of 2011.

Plans call for Qualitest chairman and CEO Marvin Samson and Endo chief operating officer Julie McHugh to lead an integration team of senior leaders from both companies. Endo said it intends to retain Qualitest's facilities in Huntsville, Ala., and Charlotte, N.C., as well as its own facility in Westbury, N.Y.

"Today's announcement brings together two highly successful businesses that I believe are an excellent fit," commented Samson. "I am confident Qualitest's unique capabilities as a leading generics provider ideally complement Endo's diversified businesses. I am convinced that this combination will enable our management team and employees to accelerate the growth of our business and continue the important work we do here at Qualitest."