Is Endo on the verge of a Valeant-type acquisition binge?

Will Endo Health Solutions ($ENDP) follow in Valeant Pharmaceuticals' ($VRX) footsteps? Already the U.S.-based company has taken one page from Valeant CEO Michael Pearson's playbook, with last week's tax-friendly buyout of Paladin Labs. Can a Valeant-esque series of buyouts be on its way?

That's the question posed by Bloomberg, which gauges the possibility of more Endo deals to come. And it's not just appearances that suggest Endo might use Valeant tactics to grow past patent expirations for its pain drugs. Endo CEO Rajiv De Silva, who stepped into the job in March, is the former president of Valeant.

"De Silva's very well-informed by Valeant's playbook," Piper Jaffray analyst David Amsellem told the news service.

Consider the Paladin deal, which will allow Endo to reincorporate in tax-advantaged Ireland. Valeant made a similar move in merging with Biovail, and lowering its own tax rate in the process. With that Irish domicile, Endo will have an edge on rivals for other pharma M&A. The lower tax rate will give Endo "a lot more flexibility in terms of pursuing deals," Amsellem told Bloomberg, "which is ultimately what it's going to have to do. This is unquestionably a game-changing transaction."

De Silva took over from CEO David Holveck, who had been adding medical devices to Endo's operations. That strategy didn't make the market happy; after De Silva took over, the company said it would consider selling off its HealthTronics unit and some other assets. Endo also said it would shed 700 jobs and cut $325 million in costs.

The new CEO's pivot back toward specialty drugs apparently has investors more excited; Endo's stock is up to a record high since last week's deal announcement. So, analysts are speculating about which buyout's next for Endo--BioDelivery Sciences ($BDSI), say? Or the generics maker Impax Laboratories ($IPXL)?

In announcing last week's buyout, De Silva said he's eyeing acquisitions in the $250 million to $500 million range. BioDelivery Sciences, another pain-drug company, fits into that. One of Bloomberg's sources says Endo would look at deals as big as $1 billion, however. That would put Impax in line.

Deals have to be forthcoming in any case, analysts figure. Endo tried to fight off generic versions of its Opana painkiller, but the FDA refused its petitions. Copycat rivals hit the market in May. Meanwhile, Lidoderm lost market exclusivity in September. Those lost sales make new sources of revenue an imperative.

- read the Bloomberg story

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