Rajiv De Silva was CEO of Endo when it pushed opioid drug sales
Cover image for the Opioid Industry Documents Archive at John Hopkins University
July 2, 2022
During the 12-month period ending in April 2021, more than 100,000 people in the United States died from overdose of drugs, mainly opioids and synthetic medications used as painkillers, according to the Centers for Disease Control and Prevention (CDC) government data. This was a roughly 30% increase from the same period the year before. So far, more than half a million Americans have died from opioid overdose.
Back in 2015, many Americans abusing prescription painkiller pills were using Opana, which was relatively easy to dissolve and inject. It was reportedly twice as potent as OxyContin, the painkiller sold by rival Purdue Pharma, which is blamed for sparking the opioid crisis in the U.S. Opana was sold by Endo Pharmaceuticals whose Chief Executive Officer at that time was Rajiv De Silva.
Under a plan named internally as Sales Force Blitz, and working with consultants from McKinsey & Company, Endo pushed sales of Opana “by assigning more sales representatives,” according to a New York Times investigation.
Apparently De Silva and his management team as well as McKinsey ignored concerns about Opana. “Government investigations and scientific publications had linked its misuse to clusters of disease, including a rare and life-threatening blood disorder,” The New York Times reported.
The newspaper’s investigation is based on more than 114,000 emails, slide presentations, spreadsheets, proposals and other documents related to McKinsey’s work as a management consulting firm for the opioid industry between 2004 and 2019. The documents were released last week by the Opioid Industry Documents Archive, a project of the University of California, San Francisco, and Johns Hopkins University.
The documents “shine a bright light on the murkier intersections of science, industry, and financial interest that continue to characterize the U.S. health care system,” Jeremy Greene, a Professor of Medicine and the History of Medicine at Johns Hopkins said in a statement.
The documents show how McKinsey advised opioid makers Endo, Purdue, Johnson & Johnson and Mallinckrodt to help them increase sales, despite the growing public outcry over the rapid spread of the opioid epidemic. The documents were released under the terms of the $573 million settlement that McKinsey reached with 47 states in February 2021. The archive is a free resource for anyone interested in learning more about the circumstances leading to the opioid crisis.
In 2013, Endo hired Rajiv De Silva as its Chief Executive. The company is in a unique position being “able to deliver innovative products and services…with clear strengths in the medically important areas of pain management and urology,” De Silva said in a statement when he took over as the CEO.
Prior to Endo, De Silva was president of Valeant Pharmaceuticals, since renamed as Bausch Health. A company based in Quebec, Canada, Valeant sold dermatology, gastrointestinal disorder, eye health, neurology and branded generic drugs.
In 2010, J. Michael Pearson became the CEO of Valeant. Since 2008, he had been the CEO of a company acquired by Valeant. Earlier he was at McKinsey - which he joined in 1984 - heading its global pharmaceutical practice and serving on the board of directors. In 2009, De Silva, a former leader in McKinsey’s pharmaceutical practice, was apparently hired by Pearson.
In the six years to 2014, Valeant’s revenues grew over ten-fold to $8.3 billion, while operating income soared 17-fold to $2 billion. The stock price rose nearly eleven-fold, over five times greater than an investment in the S&P 500 Index.
De Silva apparently sought to replicate Valeant’s strategy at Endo. Soon after taking over as the CEO of Endo, he hired McKinsey “to help chart a growth strategy,” The New York Times reported, including “to provide marketing advice about its chronic-pain medicines and other products.”
Also, with McKinsey’s help, Endo moved its head office from Malvern, Pennsylvania to Dublin, Ireland where corporate taxes were substantially lower. The move would enable Endo to acquire several companies in a tax-efficient way, according to a 2014 email from Arnab Ghatak, a McKinsey partner.
Under De Silva, Endo bought ten companies and became one of the largest U.S. manufacturers of generic opioids. The company’s stock price tripled to around $90 in 2015, during the two years after De Silva became the CEO.
Then in 2015, Endo paid $8.1 billion, including $6.5 billion in cash, to buy Par Pharmaceuticals from TPG Capital, a U.S. private equity firm. Par was a leading manufacturer of generic drugs with nearly 100 products. The transaction “builds upon our generics growth, adding a strong portfolio of high barrier-to-entry and attractive gross margin products,” De Silva said in a statement announcing the purchase.
However, about a year later Endo was forced to lower prices on many of its generic products due to intense competitive pressure. In May 2016, Endo announced weak quarterly earnings “due to the impact of several previously unanticipated headwinds: new competitive entrants…(and) greater than expected price erosion across the Generics sector,” De Silva said in a statement. That day the company’s stock fell by 40% to around $16; it is currently trading at around 55 cents.
Four months later, Endo’s board replaced De Silva as CEO. While “Endo was struggling—hard—when CEO Rajiv De Silva departed…that didn’t stop de Silva from tallying more than $19 million in 2016 pay,” according to fiercepharma.com. De Silva reportedly earned $10 million at Endo the previous year.
Meanwhile, Valeant also went into a downward spiral. Its rapid revenue and operating profit growth was driven by costly acquisitions, which ballooned its debt; massive price increases on its products led to intense regulatory scrutiny; and low spending on research and development crippled its product pipeline, which is crucial for the growth of drug companies.
Valeant’s stock reached a high of $264 in August 2015, giving it an enterprise value of $120 billion. Two months later, the stock fell to $94 after news reports that it instructed workers of Philidor, a pharmacy with ties to Valeant, to use a variety of questionable methods to try to get insurance companies to pay for its drugs. Bausch, whose stock now trades around $8.50, has an enterprise value of $25: debt of $22 billion and $3 billion of equity.
Prior to Valeant, De Silva spent six years at Novartis, the Swiss drug maker. He worked at McKinsey from 1995 to 2003, at its Florham Park, New Jersey office, after earning an MBA.
Rajiv Kanishka Liyanaarchchie De Silva holds an MBA from the University of Pennsylvania's Wharton School, 1995; an.MS in civil engineering from Stanford University, 1990; and a BSE in civil engineering from Princeton University, 1989.
In 2020, Covis Pharma appointed De Silva as the Chairman of the Board of Directors. Based in Luxembourg, the private European company “markets therapeutic solutions for patients with life-threatening conditions and chronic illnesses.” It was acquired that year by Apollo Global Management, a New York based private equity firm with a market value of $31 billion.
De Silva is also the co-founder and chairman of Asiri Skincare, a U.S. company whose 12 oz bottle of Proteya skincare lotion sells online for $32. The website describes the lotion as “all natural” with “botanical vegan ingredients.” The founders, the website states, have “years of successful dermatology and leadership experience behind them.”
Massachusetts was one of the states which sued McKinsey over its work for the opioid industry. In a tweet Maura Healey, the state’s Attorney General, stated that the release of the McKinsey documents reveal its “role in fueling the opioid epidemic…Exposing the truth is an essential part of healing for families harmed, and gives journalists, scholars, regulators, and policymakers the tools to hold the perpetrators of the opioid epidemic accountable and prevent it from happening again.”
Photo of Rajiv De Silva from Covis Pharma news release
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