Endo to acquire generics firm for $1.2bn

Endo Pharmaceuticals has entered into a definitive agreement to acquire the privately held generics company Qualitest Pharmaceuticals for around $1.2bn in cash.

Qualitest focuses on generics with high barriers to entry: controlled substances for the treatment of pain make up approximately 40 per cent of its product portfolio, and liquids make up 17 per cent. Endo, a speciality firm that has both branded products and generic offerings, already has a significant business in generic pain products and controlled substances.

The combined company will have businesses in Branded Pharmaceuticals, Generics and Devices & Services in key therapeutic areas including pain and urology.  It will also have a full pipeline of generics, with 46 Abbreviated New Drug Applications (ANDA) under review by the US Food and Drug Administration (FDA) in therapeutic areas including pain, urology, CNS, oncology and hypertension, and 24 ANDAs under development.

The merged company will have annual revenues of about $2bn and more than 3,000 employees. Qualitest Chairman and CEO Marvin Samson will partner with Endo chief operating officer Julie McHugh to lead an integration team to manage the post-merger transition. Endo intends to retain Qualitest's manufacturing facilities in Alabama and North Carolina, as well as its own facility in New York.

Endo expects Qualitest to add about $400m in annualised revenue once the deal closes. In addition, the company anticipates $30m in annualised cost savings in 2013 from synergies associated with procurement, distribution, manufacturing and both general and administrative expenses.

The acquisition is expected to close late in the fourth quarter of 2010 or at the beginning of 2011.