News Feature | August 27, 2014

Endo's Medical Device Unit Up For Sale

By Jof Enriquez,
Follow me on Twitter @jofenriq


Pharmacological firm Endo International PLC is reportedly looking to sell its medical device subsidiary American Medical Systems (AMS), three years after acquiring the business.

Citing unspecified sources familiar with the matter, the Wall Street Journal reported recently that AMS could be worth $2 billion if sold to potential buyers, including private equity firms and other healthcare companies. Endo shelled out $2.9 billion for AMS back in 2011, the report noted.

The WSJ did not specify the reason why Endo has decided to put AMS on the auction block at a potential loss. The unit, which sells products for erectile dysfunction and pelvic organ prolapse, generated $250 million in revenue, or 19 percent of total revenue for Endo for the six months up to June 30.

Earlier this year, Endo paid $830 million to settle 20,000 lawsuits filed by women who claimed that they were injured by transvaginal mesh implants sold by AMS. But, it is unclear if this had any bearing with Endo’s decision to try and jettison AMS now, the WSJ said.

Endo completed its purchase of generics drug maker DAVA Pharmaceuticals in early August for $575 million in cash, according to Pharmaceutical Business Review. Selling its medical device unit now indicates that the company wants to concentrate on its core pharmaceutical business, following the example of other drug makers that have swapped assets to focus on strengths.

Endo is also on a growing list of healthcare organizations that have used the tax inversion maneuver to move overseas to lower tax liabilities. The trend has drawn the ire of U.S. President Barack Obama and U.S. legislators who are planning to crackdown on the controversial business practice.

Before the trend became widespread, Endo had relocated from Pennsylvania to Ireland by buying Dublin-based Paladin Labs for $1.6 billion in 2013, Bloomberg reported.

Other formerly U.S.-based companies have since forged deals with foreign companies in recent months to redomicile abroad: AbbVie acquired Shire, Pennsylvania-based Mylan bought the international drug business of Abbott Laboratories, and Medtronic agreed to merge with Covidien, according to the New York Times.

The recent wave of inversions has prompted calls for immediate U.S. tax policy changes that could affect such agreements. But Endo’s leadership feels that they are in the clear.

“We closed that transaction several months ago, so we're very confident in our inversion,” Endo’s chief executive Rajiv De Silva said earlier in an article in The Irish Independent. “Our belief is that ultimately the thing that would resolve this current conundrum is comprehensive US tax reform.”

Image Credit: “Sale Sign Shop window night.” Paul. 2012 CC BY 2.0: