Endo Slumps to 2009 Low on Outlook, Dragging Down Pharma Stocks

Endo International Plc slumped to a seven-year low after the painkiller maker cut its full-year earnings forecast to well below analysts’ predictions, dragging down stocks from other pharmaceuticals companies.

Endo reduced its outlook Thursday after the markets closed, in the face of increasing competition, including from earlier-than-anticipated generic versions of its Voltaren Gel. The stock slumped 37 percent to $16.78 at 10:21 a.m. in New York, slashing its market value to about $3.7 billion. The shares have now lost about 80 percent in a year. Other drugmakers, including Mallinckrodt Plc, Allergan Plc and Mylan NV, also declined Friday.

Endo, which also makes the painkillers Opana ER and Percocet, now see earnings of $4.50 to $4.80 a share, excluding some items, while analysts predicted $5.64 on average. The reduction led analysts at RBC Capital Markets, Leerink Partners, Mizuho Securities and Piper Jaffray to reduce their ratings on the stock.

The company’s generics unit faces more competition and government guidelines limiting the use of opioids, according to Elizabeth Krutoholow, an analyst at Bloomberg Intelligence. In addition, the fact that Voltaren Gel lost its exclusivity earlier than expected trimmed revenue last quarter, Krutoholow wrote.

To reduce costs in the generic business, Endo is closing its plant Charlotte, North Carolina, and reducing its workforce in Huntsville, Alabama.

The company also appointed two new board members, including Todd B. Sisitsky, managing partner of TPG Capital, which is Endo’s third-largest shareholder according to data compiled by Bloomberg.

To contact the reporter on this story: Cecile Daurat in Wilmington at cdaurat@bloomberg.net. To contact the editors responsible for this story: Cecile Daurat at cdaurat@bloomberg.net, John Lauerman