8. Endo International

endo
Endo's $2.56 billion generic revenue was far below the company's original expectation.

Endo
Headquarters: Dublin, Ireland
2016 generic sales: $2.56 billion

Endo didn’t even make it to the top 20 generics companies by 2014 revenue. Then, the merger with Par happened, but the joy didn’t last long; its stock started tumbling like an avalanche as guidance slashing, regulatory setbacks, new rivals, generics price erosion and job cuts all contributed to its fall.

Let’s go back to May 2015, when Endo announced the $8 billion acquisition of Par Pharmaceutical. It gave Endo some 100 products from Par, including many high-barrier-to-entry, profitable generic products. The deal looked promising for Endo as Par enjoyed $1.3 billion in revenue in 2014, with compound annual revenue growth rate of 12.2% from 2012 to 2014. Endo’s stock traded at around $85 at that time, but would drop to $14 in a year.

In May 2016, Endo slashed its full-year top-line guidance from the $4.32 billion to $4.52 billion stated in its 2015 full-year financial results to $3.87 billion to $4.03 billion, and dialed back adjusted diluted EPS from $5.85 to $6.20 to $4.50 to $4.80. Then-CEO Rajiv De Silva cited new rivals on the market, greater-than-expected generics price erosion and regulatory delays as reasons for the lackluster performance. The final 2016 revenue for Endo? Just $2.56 billion. But that was later.

Shares plunged about 40% at the news, though they had already been on a downward trajectory comparable with those of Valeant. De Silva’s former title as COO of the Canadian drugmaker and a similar acquisition-heavy, debt-building strategy helped make the connection, and was probably part of the reason behind his ouster in September, followed by former EVP and CFO Suketu Upadhyay’s departure in November.  

With that readjustment in May, Endo also announced a restructuring plan to close plants and cut 740 jobs. The job-cutting spree continued in December 2016 as it sidelined its once-core pain business, tossing 375 full-time and contracted jobs. In January 2017, the company kicked off a new round of restructuring that claimed 90 jobs primarily within corporate functions and branded pharma R&D.

The Dublin drugmaker also took several hits for its star med Opana ER since 2016 as the whole country raged over an opioid epidemic.

In March 2016, the company settled a case with a New York state prosecutor, agreeing to pay $200,000 and not soft-pedal the risks of taking the drug or oversell its crush resistance. Following controversy over the med’s role in a 2015 HIV outbreak in southern Indiana, in August 2016 the company withdrew a supplemental NDA that would label Opana ER as “abuse deterrent.” The FDA found that the med’s new formulation may have made it easier for injection, and an advisory committee at the agency decided in March 2017 that the drug’s benefits are “overshadowed” by “misuse, abuse and diversion.” Possible restrictions as far as complete takedown could follow.

Now, it’s up to new CEO Paul Campanelli, the former CEO of Par, to turn things around. But it will take time to right it “from a company that grew through debt-fueled M&A to one that will primarily focus on organic growth,” Campanelli said on the company’s 2016 earnings call. The company’s $3.45 billion to $3.6 billion 2017 revenue outlook fell short of the consensus $3.83 billion estimate, while an adjusted earnings range of $3.45 to $3.75 per share didn’t come close to Wall Street’s $4.29 prediction.

8. Endo International