Headwinds from the U.S. generics market and the opioid crisis are pushing certain healthcare companies to restructure and move away from such segments, Fitch Ratings said in a report.
Mallinckrodt Public Ltd. Co. and Endo International PLC are among companies attempting to avoid potential declines in revenue and legal liabilities by sidelining assets or reducing exposure to their opioids and generic drugs portfolio.
After the U.S. Food and Drug Administration accelerated the approval of competing products in 2017, makers of generic drugs faced competitive pricing in the U.S. market.
The rating agency expects the opioid crisis and efforts to control the epidemic to continue to affect doctors' prescriptions. Further, aggressively priced generic drugs, abuse-deterrent narcotic pain formulations and newer non-narcotic drugs will add more pressure on less differentiated opioid pain medication.
Although divestitures could lower diversification, they also allow companies to focus resources on specialty branded medicines that could bring stronger growth, Fitch said. The rating agency noted that Mallinckrodt's specialty branded business was responsible for 72% of its revenues in fiscal 2017.