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Impax Laboratories Inc.

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Impax, which has a presence in the generics as well as branded market, has a robust generics pipeline. The company is targeting 12-14 generics product launches in 2016, representing $1 billion in branded/generic sales. The company is also pursuing external growth initiatives like acquisitions and partnerships. We are positive on the acquisitions of Tower Holding and Lineage Therapeutics which boosted Impax’s branded and generic drugs portfolio. The Teva/Allergan deal, which is expected to be immediately accretive to earnings, will expand Impax’s portfolio of difficult-to-manufacture or limited-competition products. Meanwhile, the company’s branded segment targets the lucrative CNS market. However, branded product, Rytary, is facing a patent challenge. The performance of the existing business especially accelerated pricing erosion for key generic products - diclofenac sodium gel and metaxalone – is also concerning.