1, This article title is: Everything That Could Go Wrong for This Drugmaker Did. 2. the second file is an example, you need to write the same layout as the example.Bloomberg Businessweek
Everything That Could
Go Wrong for This
Endo is beset by patient lawsuits, regulatory challenges, and looming debt payments.
By Cynthia Koons and Jef Feeley
January 26, 2018, 6:00 AM EST
ILLUSTRATOR: KHYLIN WOODROW FOR BLOOMBERG BUSINESSWEEK
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Opioids. Vaginal mesh. Testosterone. These have become some
of the ugliest words in the pharmaceutical industry,
telegraphing medical treatments gone awry, in some cases
leaving behind disabled customers, epic legal battles, and vast
capital destruction. Some of the industry’s largest companies
have been mired in lawsuits and government probes over these
issues. But no company has been haunted by the drug industry’s
worst nightmares as mercilessly as Endo International Plc.
Just about everything that can go wrong in the world of pharma
has gone wrong at Endo, which makes both branded and
generic drugs. Through a deal making spree largely led by its
former chief executive officer, the company amassed debt of
more than $8 billion—five times its market capitalization. That
might be tolerable for a high-growth company, but Endo faces
cratering prices for generic medicines even as it must deal with
a slew of litigation involving its products.
The new leadership says the Dublin, Ireland-based company
can fix all this; it will just take time. “It’s very important to know
that we’re not running or hiding from our challenges,” says CEO
Paul Campanelli. “We’re well-equipped to handle these types of
That includes writing massive checks to get beyond some of
Endo’s legal woes. As of November 2017 company officials have
agreed to pay more than $3.5 billion in settlements in more
than 46,000 suits over its vaginal mesh inserts alone. Endo may
have to shell out more to resolve all the mesh cases, according to
its U.S. Securities and Exchange Commission filings. Analysts
say that should largely contain the problems over the vaginal
device, but it will still drain much-needed cash.
“This is not a growth story,” Gabelli & Co.analyst Kevin Kedra
says. “There’s significant pressures, mostly stemming from the
debt load, and they’re probably not going to be able to make a
significant dent in that until 2019.”
Campanelli has been slashing costs to help keep Endo’s finances
in check. The company now operates with a staff of around
2,700, down from about 6,000 before he took the job in
September 2016. It also stopped marketing its opioid pain drugs
at the end of 2016.
PHOTOGRAPHER: RICH PEDRONCELLI/AP
Litigation related to Endo’s marketing of opioids remains the
biggest wild card. The drugmaker faces at least 125 cases filed
by U.S. state attorneys general, counties, and
municipalities, alleging its salespeople downplayed the health
risks of the extended-release version of its painkiller Opana
while overstating its benefits, according to SEC filings. Other
opioid makers, such as Johnson & Johnsonand Purdue Pharma LP,
face identical claims. The companies have denied the
The states and local governments have hired lawyers who helped
negotiate the tobacco industry’s $246 billion master settlement
in the late 1990s to handle the opioid suits. There’s no exact
figure for the damages sought, and estimates of potential
damages vary widely. Bloomberg Intelligence litigation analyst
Holly Froum figures the total liability for all opioid makers,
including Endo, could be as little as $5 billion or as high as $50
billion. “It’s obviously in a very early stage, and these things
typically take years to resolve,” Campanelli says.
The company has shown it can be proactive when the need
arises. Its extended version of Opana became the subject of
controversy: The drug has been linked to outbreaks of viral
infections like HIV as people abusing it spread diseases by
sharing needles. U.S. regulators took the unprecedented step
last June of asking the company to take the drug off the market.
Endo could have appealed that decision, but Campanelli opted to
comply—cutting off a drug that racked up around $533 million
in sales in a three-year period starting in 2014.
Campanelli is busy putting out fires that were years in the
making. In 2013 the drugmaker hired Rajiv De Silva, an exValeant Pharmaceuticals International Inc. executive and
former McKinsey & Co. consultant. At the time, Valeant was
blazing a new trail for Big Pharma expansion: buying up other
companies, cutting research, and jacking up drug prices. With
De Silva as CEO, Endo became a prolific dealmaker, acquiring
companies and drug rights—from acquisitions in the hundreds
of millions of dollars to vying for assets in the $10 billion-plus
range against Valeant. De Silva insisted at the time that Endo
wasn’t another Valeant, which ran into massive financial and
legal troubles, and said he was doing deals to build a company
that didn’t need to rely on deals to grow. He declined to
comment for this story.
De Silva’s biggest acquisition was the $8.05 billion purchase
of Par Pharmaceutical in May 2015, which gave Endo a large
foothold in the generics business. Endo, which assumed Par’s
debt, financed the deal with borrowings and proceeds from a
$2.3 billion equity offering. The Par buyout came at the height
of the company’s run: Endo’s stock price peaked around $96 in
April 2015. That was more than triple the level when De Silva
took over. But concerns over litigation and debt, as well as postValeant angst over specialty drugmakers, conspired to drive the
stock down over the following year. Ultimately, Campanelli
replaced De Silva. “We said from Day One, we’re not fixing this
in 12 months,” Campanelli says.
Testim testosterone gel.
PHOTOGRAPHER: JACQUELINE LARMA/AP PHOTO
Another hangover from the De Silva era is Endo’s testosterone
litigation. The company faces about 1,300 patient suits claiming
its testosterone-boosting gels caused fatal heart attacks in some
users. How those suits might fare remains uncertain. Two
federal court juries in Chicago last year held AbbVie Inc.
responsible for injuries suffered by men taking its AndroGel
testosterone booster—a product similar to Endo’s—and awarded a
total of $290 million in damages. But one of those verdicts was
later thrown out by a judge. In November, Endo’s Auxilium unit
won the first case to come to trial over its Testim testosterone
Still, Endo’s problems could get worse. The company is likely to
face many more Opana suits before any settlement is reached,
says Richard Ausness, a University of Kentucky law professor,
and Endo may be forced to take extreme measures to pay them
out. It could adopt the playbook used by companies sued for
selling asbestos-laced products in the 1980s and 1990s by
setting up a bankruptcy trust to resolve opioid cases, according
to Ausness. That would allow the company to hold down
settlement amounts, he says.
“Their debt numbers look terrible. And when you factor in the
thousands of opioid suits they may wind up facing, they may
have no choice but to ask the bankruptcy courts to help them
dispose of those cases,” he says.
Campanelli has heard the B-word before. “The use of the word
‘bankruptcy’—it’s not something that we’re contemplating at
this point in time,” he says. “We’re looking to collaborate to deal
with the opioid situation. If we ever got to that process, and I’m
not saying that we’re thinking of it, it would be years and years
before we would be addressing it.”
It’s also possible that any opioid manufacturer settlement could
be structured in such a way that Endo doesn’t end up
underwater. “There could be some giant master settlement—it
would just make life that much more difficult for Endo, but I
don’t think these state AGs are going to make Endo go out of
business,” says Gabelli’s Kedra.
Despite the financial and legal clouds, Endo officials say they’re
concentrating on expanding the business and working on new
injectable drugs. The company is also developing one of its key
products, Xiaflex, which is used to treat a hand deformity and
curvature of the penis, for new uses such as improving the
appearance of cellulite. Cosmetic drugs, such as Allergan Plc’s
Botox, have turned into powerhouses for pharma companies,
and Campanelli has been praising Xiaflex’s prospects. “It fits the
model of the new Endo,” he says. Campanelli, however, still has
plenty of problems from the old Endo to fix first.
BOTTOM LINE – Generic drugmaker Endo has agreed to pay billions
of dollars in settlements for vaginal mesh suits—and possibly faces
much more for testosterone and opioid claims.
I N T E R O F FI C E M E M O R A N D U M
DAVID GOECKELER, EXECUTIVE VP AND GM, SECURITY BUSINESS
_______________, SECURITY BUSINESS ANALYST
INVEST NOW IN CYBER SECURITY INFRASTRUCTURE
There is an urgent need for Cisco to invest in cyber security infrastructure to meet rapidly
growing demand in the marketplace. If the company does not act quickly to accelerate the
speed of cyber-security application deployment, we will forgo the tremendous untapped
market opportunities that exist within this space.
The global market demand for cyber security products and services is expected to
increase by 169.4 percent in the next eight years reaching 205.8 billion dollars1. This
rapid growth is being fueled by increased consumer awareness and strong market
influences. Most recently, the massive Equifax breech has increased market potential
and rate of entry after companies across the globe have witnessed the terrifying effects
of inadequate security practices2.
In response to these market developments, Cisco should invest in accelerating the timeto-deployment of its security products and services. Analysis shows that the current
security application infrastructure will be insufficient in meeting future market demand.3
I would therefore like to discuss potential options for Cisco’s resource allocation and
production capabilities to to the expanding market. Please provide some available times
you have to meet this week and I will send a calendar invite.
“Market Demand for Cyber Security Products and Services to Hit $205.8 Billion in next Eight
Years.” Military and Aerospace Electronics, PennWell Corporation, 29 June 2017,
“Security Services.” Cisco, 18 Sept. 2017, www.cisco.com/c/en/us/products/security/servicelisting.html.
Shankleman, Jessica, et al. “We’re Going to Need More Lithium.” Bloomberg.com,
Bloomberg, 7 Sept. 2017, www.bloomberg.com/graphics/2017-lithium-battery-future/.
Viswanatha, Aruna, and Brent Kendall. “FBI Looking Into Equifax Data Breach.” The Wall
Street Journal, Dow Jones & Company, 8 Sept. 2017, www.wsj.com/articles/fbi-looking-intoequifax-data-breach-1504902745.
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