Endo International PLC (NASDAQ:$ENDP) made the decision to lower its 2017 revenue forecast on Tuesday, August 8. The Malvern, Pennsylvania-based company said that it expects lower sales of branded drugs to add to the pricing pressures its generic drugs have been facing, which caused Endo’s shares to drop to their lowest since 2003.
If you’re interested in the drug manufacturers industry, you are probably aware that generic drug-makers have been significantly hurt by an acceleration in the decline of drug prices as retail pharmacies in the United States wield more leverage during purchases when regulators are working towards faster approval of these copycat drugs.
In the second quarter, Endo’s revenue from its United States generics unit was unchanged from 2016. Why? A 34% decline in sales of Endo’s older generics drug was counterbalanced by strength in its sterile injectables, new launches and alternative dosages businesses.
According to Ken Cacciatore, an analyst for Cowen & Co., it is unlikely that the pressure on Endo’s generics will relent and any near-term stabilization could end up being elusive. “We have very little faith in the consistency of the operations from quarter to quarter,” said Cacciatore.
Endo has said that it continues to forecast sales at its generics business to fall in high single-to low double-digit percentage range in 2017. For full-year total revenue, Endo now forecasts $3.38 billion to $3.53 billion from $3.45 billion to $3.60 billion.
So what caused the lowered forecast? Many speculate it is due to the withdrawal of Endo’s branded opioid painkiller Opana ER. In early July, Endo agreed to pull the drug at the decree of a U.S. regulator, due to the opioid epidemic.
Now, Endo forecasts full year sales of its branded drugs to fall in the mid-to high-teens percent range. Additionally, Endo reduced its forecast for adjusted profit from continuing operations from $3.45-$3.75 to $3.35 to $3.65.
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