Segment Information

12 Months Ended

Dec. 31, 2013

Segment Reporting Information, Revenue for Reportable Segment [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 “Strativa Pharmaceuticals” or “Strativa”). 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 brand name drugs. Par’s generic drugs are developed using similar methodologies, for the same purpose (e.g., seeking bioequivalence with a brand name 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 Strativa (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 Strativa. 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 Period						For the Year Ended
	December 31, 2013			September 29, 2012 to December 31, 2012			January 1, 2012 to September 28, 2012			December 31, 2011
	(Successor)			(Successor)			(Predecessor)			(Predecessor)
Revenues:
Par Pharmaceutical		$1,028,418			$227,312			$743,360			$834,592
Strativa	69,049			18,827			60,508			91,546
Total revenues		$1,097,467			$246,139			$803,868			$926,138
Gross margin:
Par Pharmaceutical	271,396			33,776			296,338			320,313
Strativa	46,647			11,669			46,012			66,431
Total gross margin		$318,043			$45,445			$342,350			$386,744
Operating (loss) income:
Par Pharmaceutical	(48,082		)	(25,938		)	116,591			(10,973		)
Strativa	(17,361		)	(3,825		)	(57,151		)	(39,620		)
Total operating (loss) income		($65,443	)		($29,763	)		$59,440			($50,593	)
Gain (loss) on marketable securities and other investments, net	1,122			—			—			237
Gain on bargain purchase	—			5,500			—			—
Interest income	87			50			424			736
Interest expense	(95,484		)	(25,985		)	(9,159		)	(2,676		)
Loss on debt extinguishment	(7,335		)	—			—			—
(Benefit) provision for income taxes	(61,182		)	(17,682		)	29,447			(5,996		)
(Loss) income from continuing operations		($105,871	)		($32,516	)		$21,258			($46,300	)

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

	For the Year Ended			For the Period				For the Year Ended
Product	December 31, 2013			September 29, 2012 to December 31, 2012		January 1, 2012 to September 28, 2012		December 31, 2011
	(Successor)			(Successor)		(Predecessor)		(Predecessor)
Par Pharmaceutical
Budesonide (Entocort® EC)		$198,834			$36,710		$103,762		$70,016
Propafenone (Rythmol SR®)	70,508			19,623		53,825		69,835
Metoprolol succinate ER (Toprol-XL®)	56,670			31,287		154,216		250,995
Lamotrigine (Lamictal XR®)	54,577			—		—		—
Divalproex (Depakote®)	46,635			2,436		9,099		—
Rizatriptan (Maxalt®)	45,598			—		—		—
Bupropion ER (Wellbutrin®)	45,403			11,255		34,952		—
Chlorpheniramine/Hydrocodone (Tussionex®)	33,518			17,403		30,706		39,481
Modafinil (Provigil®)	27,688			16,956		88,831		—
Diltiazem (Cardizem® CD)	27,212			3,702		—		—
Other (1)	390,346			79,789		249,383		374,288
Other product related revenues (2)	31,429			8,151		18,586		29,977
Total Par Pharmaceutical Revenues		$1,028,418			$227,312		$743,360		$834,592
Strativa
Megace® ES		$39,510			$10,910		$38,322		$58,172
Nascobal® Nasal Spray	26,864			7,138		17,571		21,399
Other	(910		)	130		130		3,309
Other product related revenues (2)	3,585			649		4,485		8,666
Total Strativa Revenues		$69,049			$18,827		$60,508		$91,546

(1) The further detailing of revenues of the other approximately 50 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 year ended 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) or for the year ended December 31, 2011 (Predecessor).

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