Recently, the US Food and Drug Administration (FDA) approved Endo Pharmaceuticals’ (ENDP) toresmide tablets, the generic version of Demadex, for treating edema patients associated with congestive cardiac failure, renal and hepatic diseases.

The drug has also been approved for treating hypertension as a monotherapy as well as a combination therapy. The US regulatory body has cleared toresmide tablets in strengths of 5 mg, 10 mg, 20 mg and 100 mg. The US approval of toresmide further strengthens the generic portfolio at Endo Pharma.

We note that toresmide was incorporated into Endo Pharma’s portfolio through the acquisition of Qualitest Pharmaceuticals (a generic company) in December 2010, for $1.2 billion in cash. The acquisition helped diversify Endo Pharma’s business apart from bolstering its position in the generic and pain drug portfolios.

The approval of toresmide comes close on the heels of the US approval of another generic drug, emoquette, also acquired via the purchase of Qualitest Pharmaceuticals. Emoquette, an oral contraceptive for the prevention of pregnancy, is the generic version of Johnson & Johnson’s (JNJ) oral contraceptive Ortho-Cept.

We note that Endo Pharma is on an acquisition spree to expand its business. The acquisition of Qualitest Pharmaceuticals was the third major acquisition of Endo Pharma in 2010. Prior to acquiring Qualitest Pharmaceuticals, Endo Pharma purchased Penwest Pharmaceuticals Co. (in November 2010) for approximately $144 million or $5.00 per share in cash. Through this deal, Endo Pharma aims to drive growth in the pain management space.

In July 2010, Endo Pharma purchased HealthTronics Inc., a provider of urology products and services. The acquisition has boosted Endo Pharma’s urology franchise. Furthermore, in January 2011, Endo Pharma inked a deal with Orion Corporation, a European research & development-based pharmaceutical and diagnostic company, to develop its oncology portfolio.

Our Recommendation

Currently, we have a Neutral stance on the stock in the long run. Besides, Endo Pharma carries a Zacks #3 Rank, implying a short-term Hold rating.

 
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