Pomerantz Appointed Co-Lead Counsel in Endo International Securities Litigation
On February 4, 2021, U.S. District Judge Michael M. Baylson of the Eastern District of Pennsylvania appointed Pomerantz LLP as Co-Lead Counsel on behalf of Co-Lead Plaintiffs Alexandre Pelletier, Nathan Joseph Dole, and Lane A. Wingard in Pelletier v. Endo International plc, 17-cv-5114 (E.D. Pa.), a securities litigation being pursued on behalf of a class of defrauded investors concerning allegations that Endo International plc (“Endo” or the “Company”) misled investors regarding the source and resilience of record profits from their generics division while concealing unsustainable, non-competitive pricing behavior and government investigations.
Endo International plc provides specialty healthcare solutions to the medical and healthcare industries around the globe. In 2015, the Company acquired Par Pharmaceutical Holdings, Inc. ("Par Pharmaceutical"), a manufacturer and distributor of generic drugs.
The complaint alleges that Endo failed to disclose that: (i) Par Pharmaceutical had colluded with several of its industry peers to fix generic drug prices; (ii) the foregoing conduct constituted a violation of federal antitrust laws; (iii) the competitive advantages of the Par Pharmaceutical acquisition, which Endo touted to its shareholders as "a compelling opportunity to drive future double-digit growth, serve our customers and build shareholder value," were in fact derived in part from Par Pharmaceutical's illegal conduct and thus unsustainable; (iv) for the same reasons, the "impressive track record of delivering strong operating results" that Endo attributed to Defendant Paul V. Campanelli in announcing his promotion to Endo's CEO consisted in part of illegal conduct; and (v) for the foregoing reasons, Endo's revenues during the class period were in part the result of illegal conduct and likewise unsustainable.
On November 3, 2016, media outlets reported that U.S. prosecutors were considering filing criminal charges by the end of 2016 against Par Pharmaceutical and several other pharmaceutical companies for unlawfully colluding to fix generic drug prices. On this news, Endo's share price fell $3.54 per share, or 19.48%, to close at $14.63 on November 3, 2016.
On March 1, 2017, Endo filed its 2016 annual report with the SEC, reporting a net loss of $3.35 billion, or $15.03 per diluted share, on revenue of $4.01 billion, citing, in part, a 27% increase in cost of revenues and a decrease in gross margins from 36% in 2015 to 34% in 2016, results which reflected the extent to which Par Pharmaceutical's unlawful conduct had previously inflated Endo's revenues. On this news, Endo's share price fell $0.83 per share, or 6.08%, to close at $12.82 per share on March 1, 2017.
Then, on October 31, 2017, attorneys general from 46 states and the District of Columbia amended their antitrust case on generic drug price-fixing conspiracy against the $75 billion generic drug industry to add 18 new companies, including Endo's wholly owned subsidiary Par Pharmaceutical Companies, Inc. The states allege these companies violated antitrust laws to artificially inflate the prices of the drugs by agreeing to "collectively raise and/or maintain prices for a particular generic drug," and agreeing to divvy up the market for the drugs to reduce competition by "refusing to bid for particular customers or by providing a cover bid that they knew would not be successful." This in effect "avoided price erosion" and "increased pricing for targeted products without triggering a 'fight to the bottom' among existing competitors."
According to the amended complaint, these companies conspired to unreasonably restrain trade, artificially inflate and reduce competition in the generic pharmaceutical industry for the markets of fifteen generic drugs: Acetazolamide, Doxycycline Hyclate Delayed Release, Doxycycline Monohydrate, Fosinopril-Hydrochlorothiazide, Glipizide-Metformin, Glyburide, Glyburide-Metformin, Leflunomide, Meprobamate, Nimodipine, Nystatin, Paromomycin, Theophylline, Verapamil and Zoledronic Acid. As a result of the conspiracy, "[p]rices for dozens of generic drugs have risen - while some have skyrocketed, without explanation, sparking outrage from politicians, payers and consumers across the country whose costs have doubled, tripled, or even increased 1,000% or more."