Endo Pharmaceuticals: From

LBO to…?
Acquiring Algos: The right
strategic decision for Endo
BY GROUP 3
 An Urge To Merge

1. Future Competition Elimination

 A promising pipeline of products and proprietary
technologies and lately considered a potential threat
 Algos has potential to move the pain management
industry to yet a new level of pharmaceutical efficacy
through their new proprietary approaches
 Would provide an equivalent analgesia with half the
narcotic and allow production of a whole new class of
drugs that could obsolete all of today’s pain
management products
 Potential applications would cover all analgesics across
a $6 billion market
 Especially important given increased focus on
developing understanding of pain management in
healthcare setting
 Merge To Surge
3. Capability Enhancement
 Working with Endo will enhance Algos capability
in terms of working with FDA and getting the
approval for their new drug - MorphiDex.
 With the success of MorphiDex, Endo will be
able to expand into all pain management
categories.
 Merger with Endo and successful approval for
MorphiDex, will give Algos the capability to
expand their product lines with multiple dose
formulations.
 Both Algos and Endo will benefit from R&D
capability enhancements.
4. Enhanced Potential to Develop new
Innovative Drugs
 The science behind Algo’s innovative approach
to pain management has the potential to create
new drugs
 Endo's capability would be enhanced in terms of
research and clinical testing infrastructure which
would accelerate Endo to venture into new
product development.
 For Algo, adequate financing and experience
would be required for clinical trials and drug
approval. Merger with Endo can be beneficial
for Algo in this regard.
Merge To Emerge

Conclusion and Future Prospects

 The Merger between Endo and Algo is in alignment with Endo’s
strategic objectives as is evident from the benefits highlighted
 Algo’s proprietary technology will give thrust to Endo’s product
strategy of focusing on specialty products
 Merger will give ownership of financially promising drugs (Morphidex
and 2 other drugs were expected to generate $361 million in sales by
2002)
 Mitigation of future competitive threat from Algo
 Although Merger would defer value realization for investors and
option holders but the value addition would more than compensate
for it
 The combined entity will be able to navigate through the regulatory
challenged faced by Algo due to Endo’s expertise in working with FDA.
 Algo’s technology in combination with existing analgesics had the
potential to produce whole new class of pain management products
with narcotic requirement reduced to half
 Finally, there wouldn’t be a better window of pushing through the
deal as Endo is having a profitable revenue growth and Algo’s stock
price has plummeted