Segment Information

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Segment Information

Segment Information:

We operate in two reportable business segments: generic pharmaceuticals (referred to as “Par Pharmaceutical” or “Par”) and branded pharmaceuticals (referred to as “Par Specialty Pharmaceuticals” or “Par Specialty”). Branded products are marketed under brand names through marketing programs that are designed to generate physician and consumer loyalty. Branded products generally are patent protected, which provides a period of market exclusivity during which they are sold with little or no direct competition. Generic pharmaceutical products are the chemical and therapeutic equivalents of corresponding brand drugs. The Drug Price Competition and Patent Term Restoration Act of 1984 provides that generic drugs may enter the market upon the approval of an ANDA and the expiration, invalidation or circumvention of any patents on corresponding brand drugs, or the expiration of any other market exclusivity periods related to the brand drugs. Our chief operating decision maker is our Chief Executive Officer.

Our business segments were determined based on management’s reporting and decision-making requirements in accordance with FASB ASC 280-10 Segment Reporting. We believe that our generic products represent a single operating segment because the demand for these products is mainly driven by consumers seeking a lower cost alternative to branded drugs. Par’s generic drugs are developed using similar methodologies, for the same purpose (e.g., seeking bioequivalence with a branded drug nearing the end of its market exclusivity period for any reason discussed above). Par’s generic products are produced using similar processes and standards mandated by the FDA, and Par’s generic products are sold to similar customers. Based on the similar economic characteristics, production processes and customers of Par’s generic products, management has determined that Par’s generic pharmaceuticals are a single reportable business segment. Our chief operating decision maker does not review the Par (generic) or Par Specialty (brand) segments in any more granularity, such as at the therapeutic or other classes or categories. Certain of our expenses, such as the direct sales force and other sales and marketing expenses and specific research and development expenses, are charged directly to either of the two segments. Other expenses, such as general and administrative expenses and non-specific research and development expenses are allocated between the two segments based on assumptions determined by management.

Our chief operating decision maker does not review our assets, depreciation or amortization by business segment at this time as they are not material to Par Specialty. Therefore, such allocations by segment are not provided.

The financial data for the two business segments are as follows ($ amounts in thousands):

	For the Year Ended			For the Year Ended			For the Period
	December 31, 2014			December 31, 2013			September 29, 2012 to December 31, 2012			January 1, 2012 to September 28, 2012
	(Successor)			(Successor)			(Successor)			(Predecessor)
Revenues:
Par Pharmaceutical		$1,241,131			$1,028,418			$227,312			$743,360
Par Specialty	67,490			69,049			18,827			60,508
Total revenues		$1,308,621			$1,097,467			$246,139			$803,868
Gross margin:
Par Pharmaceutical	436,078			271,396			33,776			296,338
Par Specialty	43,037			46,647			11,669			46,012
Total gross margin		$479,115			$318,043			$45,445			$342,350
Operating (loss) income:
Par Pharmaceutical	(30,938		)	(48,082		)	(25,938		)	116,591
Par Specialty	(35,674		)	(17,361		)	(3,825		)	(57,151		)
Total operating (loss) income		($66,612	)		($65,443	)		($29,763	)		$59,440
Gain on marketable securities and other investments, net	—			1,122			—			—
Gain on bargain purchase	—			—			5,500			—
Interest income	18			87			50			424
Interest expense	(108,427		)	(95,484		)	(25,985		)	(9,159		)
Loss on debt extinguishment	(3,989		)	(7,335		)	—			—
Other income	500			—			—			—
(Benefit) provision for income taxes	(72,993		)	(61,182		)	(17,653		)	29,530
Net (loss) income		($105,517	)		($105,871	)		($32,545	)		$21,175

Total revenues of our top selling products were as follows ($ amounts in thousands):

	For the Year Ended		For the Year Ended		For the Period
Product	December 31, 2014		December 31, 2013		September 29, 2012 to December 31, 2012		January 1, 2012 to September 28, 2012
	(Successor)		(Successor)		(Successor)		(Predecessor)
Par Pharmaceutical
Budesonide (Entocort® EC)		$142,853		$198,834		$36,710		$103,762
Bupropion ER (Wellbutrin®)	84,467		45,403		11,255		34,952
Propafenone (Rythmol SR®)	75,966		70,508		19,623		53,825
Amlodipine/Valsartan (Exforge®)	60,784		—		—		—
Divalproex (Depakote®)	59,052		46,635		2,436		9,099
Metoprolol succinate ER (Toprol-XL®)	46,251		56,670		31,287		154,216
Clonidine ER (Kapvay®)	45,134		13,008		—		—
Lamotrigine (Lamictal XR®)	40,673		54,577		—		—
Aplisol®	35,228		—		—		—
Modafinil (Provigil®)	2,123		27,688		16,956		88,831
Chlorpheniramine/Hydrocodone (Tussionex®)	26,899		33,518		17,403		30,706
Other (1)	594,751		450,148		83,491		249,383
Other product related revenues (2)	26,950		31,429		8,151		18,586
Total Par Pharmaceutical Revenues		$1,241,131		$1,028,418		$227,312		$743,360
Par Specialty
Nascobal® Nasal Spray		$32,332		$26,864		$7,138		$17,571
Megace® ES	31,653		39,510		10,910		38,322
Other and other product related revenues (2)	3,505		2,675		779		4,615
Total Par Specialty Revenues		$67,490		$69,049		$18,827		$60,508

(1) The further detailing of revenues of the other approximately 85 generic drugs was not considered significant to the overall disclosure due to the lower volume of revenues associated with each of these generic products. No single product in the other category was significant to total generic revenues for the years ended December 31, 2014 (Successor) and December 31, 2013 (Successor), the period from September 29, 2012 to December 31, 2012 (Successor) or for the period from January 1, 2012 to September 28, 2012 (Predecessor).

(2) Other product related revenues represents licensing and royalty related revenues from profit sharing agreements.