New owners of local pharma company trying to revive an old name

This article was originally published on Feb. 9, 1998.

One trip down a drugstore or supermarket aisle and you know that pain is big business. Pills, capsules, powders, gelcaps, heating pads, ice packs, rubs, ointments and liquids in a rainbow of colors all promise relief from pain.

Drugstore remedies, though, are powerless against the often excruciating chronic pain of such diseases as AIDS and cancer, or the acute but severe pain that can follow surgery.

Salving this kind of pain requires powerful, potentially addictive, prescription drugs. Twenty and 30 years ago, with fears of addiction high, doctors often went easy on the prescriptions and counseled patients to live with their pain.

Now, however, there is a growing feeling that in some cases, especially terminal illnesses, it may be more humane to relieve pain than to prevent addiction.

Into this ballet of chemistry and compassion, medicine and human nature come the new owners of Endo Pharmaceuticals, who believe the time is right for growth based on the company’s two longtime specialties: pain medication, and cough and cold remedies.

Endo, founded in 1920 on Long Island, was bought by DuPont Co. in 1969 and later merged into DuPont Merck Pharmaceutical Co., a joint venture of the chemical company and Merck & Co.

Endo made two of the best-known pain medications, Percodan and Percocet, used primarily for postsurgical relief. But DuPont Merck hadn’t done much with them in recent years, and the “Percos” had lost market share. By mid-1996, the former Endo businesses were on the block.

Last summer, three DuPont Merck executives bought Endo, which had sales of $100 million last year, and moved its headquarters to Chadds Ford.

Carol Ammon, 47, president of the spun-off company, was president of the DuPont Merck division that operated Endo, the culmination of a career at DuPont that started when she was hired as Endo plant manager.

Louis Vollmer, who had been sales director of a DuPont unit, joined her as Endo’s executive vice president for sales and marketing. Then, Mariann MacDonald, a vice president at DuPont Merck U.S., was recruited as Endo’s executive vice president for manufacturing.

Betting that a relatively small drug company can survive and prosper takes a certain amount of moxie, said Dr. Joseph Schwartz, an expert in pharmaceutical manufacturing at the Philadelphia College of Pharmacy and Science.

“What we’re seeing in the industry is these megamergers and, from my point of view, it’s unusual to go back to a smaller size and independent company. I think it’s a gutsy thing to do, going in the opposite direction of the industry,” he said.

The Endo executives, though, see a lot of promise for their company.

“I had 29 years of service with DuPont, but I never looked back,” MacDonald said. “We had nice jobs before. But this was a vision.”

The vision is to restore Endo to the kind of company it was in its early days. Ammon said that Endo’s founding family was “a very entrepreneurial group that created a very fine research-and-development operation and some of the best products available,” and that she hopes to re-create that environment at the company.

“These drugs really hadn’t been promoted for a few years, and that allowed competitors to capitalize on the market,” Vollmer said. “We’re going out to get those markets back.”

In all its lines — pain medications and cough and cold remedies, branded products and generic products — Endo’s medications are better-known to doctors than to the general public, because most or all contain painkillers so powerful that they require a doctor’s prescription.

The Perco family — Percodan, Percocet and the newer Percolone — are the company’s best sellers. But its Hyco line — Hycotuss, Hycomine and Hycodan, cough and cold remedies that also must be prescribed because of the painkillers they contain — “was the gold standard years ago,” until competitors took advantage of DuPont Merck’s inattention to gain market share with heavy promotions, Vollmer said.

The new owners plan to capitalize on the name recognition of Endo, and the company’s reputation as the inventor of both the Perco and Hyco lines, to regain what has been lost, Vollmer said.

Endo is unusual among small drug companies in offering both branded and generic products, and in maintaining a heavy research-and-development operation.

The executives said they planned to double their R&D spending to strengthen the company’s pipeline of future branded products and to create a stronger line of generics. About 70 percent of Endo’s sales are branded products and 30 percent are generics.

More than half of its sales come from medications for pain management, a potential building block in an era in which pain medications are being used more liberally.

“Doctors used to believe there was no way to control cancer pain, that you just had to live with it,” said Dr. Rebecca Finley, chair of pharmacy practice at Philadelphia College of Pharmacy and Science. Now, though, “the education is to treat the pain, not to fear the addiction.”

Endo doesn’t have the pain field to itself. “There’s a lot more competition out there for these products than ever before, and there are lots of generic alternatives,” Finley said.

Other small pharmaceutical producers that focus on acute pain, she said, include Purdue-Frederick of Norwalk, Conn., and Roxane Co. of Columbus, Ohio.

Endo’s commitment to research is unusual for a company its size. Of its 62 employees, 32 staff the research-and-development labs in Garden City, on Long Island. The other 30 are at corporate headquarters.

The company’s manufacturing will continue to be done by DuPont Merck, and its sales force consists primarily of manufacturers’ representatives who work independently rather than being employed by the company.

Pain medications aren’t Endo’s only stock in trade.

One of its products, Symmetrel, is used to relieve symptoms of influenza and can keep the flu virus from reproducing if it’s taken early enough. At the request of U.S. health officials, Endo sent a supply of Symmetrel to Hong Kong last fall for use against the avian flu. The avian flu virus could not be replicated to create a vaccine because of its danger to humans, and doctors wanted to test how effective Symmetrel could be in controlling the spread of disease. Endo executives said they had not yet received any reports on the project.

Vollmer predicts Endo’s growth will track industry averages, about 5 percent to 7 percent gain a year for generic products and 15 percent or more a year for branded products.

Endo executives would not say how much they paid for the company, or how much was invested by Kelso & Co., the New York investment house that helped with the purchase and has retained a stake.

At Endo’s new corporate headquarters, one floor of an office building in the Brandywine Valley, a company character that mixes old and new is starting to emerge.

Carpet is being laid, and interim fixtures, such as a boardroom table made of plywood and two-by-fours, are giving way to permanent furnishings.

The old Endo logo has been revived and emblazoned on the building’s facade, and company history is showcased in the boardroom, with displays of items including old bottles, prescriptions and a salesman’s sample bag, plus photos of the founding family.

But the spirit of a small, entrepreneurial company is evident, too. In-line skating is practically a company sport: After Vollmer received in-line skates as a Christmas gift, Ammon and other employees joined him on a roll.