Endo, Valeant, KV: 3 budgets, 3 challenges

Here's a tale of three small drugmakers and their budgets. Two have big line items earmarked for spending; the third is running out of cash fast and is looking for help.

First, Endo Pharmaceuticals: Its CEO, David Holveck, told Bloomberg that he has an acquisition budget of $500 million. Endo's current shopping list includes health IT and diagnostics. "Everything in the treatment of patients starts with diagnostics," Holveck told the news service. And Endo's not shy about making deals; it agreed to buy two companies last year, one generics firm (Qualitest Pharmaceuticals, $1.2 billion) and the other a urologic lab and device company (HealthTronics, $223 million).

Next, there's Valeant Pharmaceuticals, which also has $500 million to spend on deals. It's looking to expand outside the U.S., CEO Michael Pearson told Bloomberg; markets it especially likes are Poland, Mexico, Brazil, Canada and Australia. Valeant, of course, is the company that merged with Biovail, and that deal has prompted the shopping. Before the merger, Valeant's business was 50/50 U.S. and ex-U.S.; now, it's 63 percent in the U.S. "[W]e would like to get it back to that 50/50," Pearson said.

Finally, the beleaguered KV Pharmaceuticals. The company is low on cash after a long series of setbacks--including an 18-month production shutdown after recalls and a federal investigation, and FDA's rebuff on its new drug Gestiva--and it's now "evaluating its liquidity outlook," the St. Louis Post-Dispatch reports. Possible options? New equity partners, new loans or bankruptcy protection. "They've got to raise capital, [but] they're a huge credit risk," Gabelli & Co. analyst Kevin Kedra told the paper. "It's difficult to know exactly what moves they can make."

- get the Bloomberg piece
- see the news, also from Bloomberg
- read the Post-Dispatch story