Ireland-domiciled specialty pharmaceutical company Endo International plc faced challenging times in 2016. In fact, it was one of the worst performers of the S&P 500 Index.
With the company’s key business segments under tremendous pressure and the ongoing probe by the U.S. Department of Justice (DoJ) into the possible collusion for the pricing of generic drugs among other things, the year gone by wasn’t very smooth and 2017 doesn’t seem to hold very bright prospects either.
Performance in 2016
Shares of Endo have largely underperformed the S&P 500 Composite Market in 2016. While the stock plunged 72.2% in the year, S&P 500 Composite Market gained 13.1%.
Moreover, shares of the company have also underperformed the Zacks classified Medical-Drugs industry in 2016, which witnessed a decline of 22.9%.
Segments under Pressure
Both of Endo’s Branded and Generic segments are reeling under immense pressure. Revenues from the Generics Base business continued to decline sequentially in the third quarter of 2016 due to intensifying consortium pricing pressures, and additional competitive entrants and product discontinuations, along with discrete factors, including destocking and shifts in purchase timing due to market conditions.
Given the steeper-than-expected erosion in the base business during the third quarter and the full year, the company expects erosion in 2017 to be higher than its previous assumption of 10% to 12%. Endo expects these factors and a steeper decline to continue into 2017 given the challenging competitive landscape and pricing pressures.
Endo’s Branded segment also continues to be hurt by the earlier-than-expected generic competition for Voltaren Gel as well as a continuous rise in the number of public policy and regulatory actions related to pain products.
The company has also found itself in the middle of the drug pricing controversy with the DoJ investigating the possibility of price collusion over generic drugs that is allegedly being followed by several companies such as Endo, Mylan N.V and Lannett Company, Inc. among others (Read more: Generic Stocks Feel Pricing Heat, 1st Charges Filed in DoJ Antitrust Probe).
In fact, in the Form 10-Q for the period ended Sep 30, 2016, Endo revealed having received subpoena in Dec 2014 from the antitrust division of the DoJ requesting documents and information primarily on product and pricing relating to digoxin and its generic doxycycline products, as well as on communication with competitors and others regarding these products.
On the bright side, the company’s efforts to prioritize R&D projects bode well. Having entered into an agreement to return Belbuca rights to BioDelivery Sciences International, Inc. (effective Jan 6, 2017), Endo plans to focus on Xiaflex in the approved indications and the cellulite development program. The company will also be concentrating on its pain portfolio products, including Opana ER and Percocet among others.
Endo recently appointed Paul V. Campanelli as the new President and Chief Executive Officer.
What do the Numbers Say?
Endo currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. (Looking for the Best Stocks for 2017? Be among the first to see our Top Ten Stocks for 2017 portfolio here.)
The company is expected to record earnings and sales growth of 0.6% and 1.8%, respectively, in 2017. Its earnings estimates for 2017 have also declined 5.1% over the past 60 days.
ENDO INTL PLC Price and Consensus
With uncertainties overshadowing the stock, it remains to be seen if Endo can change investor sentiment and put the focus off litigations and the ongoing pricing controversy in 2017, in turn, helping it turn around.
Image: Bigstock
Endo International (ENDP): Can the Stock Rebound in 2017?
Ireland-domiciled specialty pharmaceutical company Endo International plc faced challenging times in 2016. In fact, it was one of the worst performers of the S&P 500 Index.
With the company’s key business segments under tremendous pressure and the ongoing probe by the U.S. Department of Justice (DoJ) into the possible collusion for the pricing of generic drugs among other things, the year gone by wasn’t very smooth and 2017 doesn’t seem to hold very bright prospects either.
Performance in 2016
Shares of Endo have largely underperformed the S&P 500 Composite Market in 2016. While the stock plunged 72.2% in the year, S&P 500 Composite Market gained 13.1%.
Moreover, shares of the company have also underperformed the Zacks classified Medical-Drugs industry in 2016, which witnessed a decline of 22.9%.
Segments under Pressure
Both of Endo’s Branded and Generic segments are reeling under immense pressure. Revenues from the Generics Base business continued to decline sequentially in the third quarter of 2016 due to intensifying consortium pricing pressures, and additional competitive entrants and product discontinuations, along with discrete factors, including destocking and shifts in purchase timing due to market conditions.
Given the steeper-than-expected erosion in the base business during the third quarter and the full year, the company expects erosion in 2017 to be higher than its previous assumption of 10% to 12%. Endo expects these factors and a steeper decline to continue into 2017 given the challenging competitive landscape and pricing pressures.
Endo’s Branded segment also continues to be hurt by the earlier-than-expected generic competition for Voltaren Gel as well as a continuous rise in the number of public policy and regulatory actions related to pain products.
The company has also found itself in the middle of the drug pricing controversy with the DoJ investigating the possibility of price collusion over generic drugs that is allegedly being followed by several companies such as Endo, Mylan N.V and Lannett Company, Inc. among others (Read more: Generic Stocks Feel Pricing Heat, 1st Charges Filed in DoJ Antitrust Probe).
In fact, in the Form 10-Q for the period ended Sep 30, 2016, Endo revealed having received subpoena in Dec 2014 from the antitrust division of the DoJ requesting documents and information primarily on product and pricing relating to digoxin and its generic doxycycline products, as well as on communication with competitors and others regarding these products.
On the bright side, the company’s efforts to prioritize R&D projects bode well. Having entered into an agreement to return Belbuca rights to BioDelivery Sciences International, Inc. (effective Jan 6, 2017), Endo plans to focus on Xiaflex in the approved indications and the cellulite development program. The company will also be concentrating on its pain portfolio products, including Opana ER and Percocet among others.
Endo recently appointed Paul V. Campanelli as the new President and Chief Executive Officer.
What do the Numbers Say?
Endo currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. (Looking for the Best Stocks for 2017? Be among the first to see our Top Ten Stocks for 2017 portfolio here.)
The company is expected to record earnings and sales growth of 0.6% and 1.8%, respectively, in 2017. Its earnings estimates for 2017 have also declined 5.1% over the past 60 days.
ENDO INTL PLC Price and Consensus
ENDO INTL PLC Price and Consensus | ENDO INTL PLC Quote
With uncertainties overshadowing the stock, it remains to be seen if Endo can change investor sentiment and put the focus off litigations and the ongoing pricing controversy in 2017, in turn, helping it turn around.