Endo Pharmaceuticals:

From LBO to…?

BY GROUP 3
 Reasons 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
 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.
 Endo's capability would be enhanced in terms of
research and clinical testing infrastructure which
would accelerate Endo to venture into new product
development.
 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.
 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