Apax Partners is taking an early exit from its Qualitest, striking a deal with listed, Pennsylvania-based drug company Endo Pharmaceuticals to unload the asset for $1.2 billion. The sale comes after just three years for Apax, which acquired Qualitest in 2007.

Endo, meanwhile, has been on a recent M&A streak as it pushes into the generic drug space. It bought Penwest Pharma last month for $144 million. The company also acquired Texas-based HealthTronics, a maker of urological products, in May for $223 million.

Specifics on the Qualitest deal were not immediately available and calls seeking comment were not acknowledged by press time. The transaction is expected to close in the first quarter of 2011, or even as early as the end of 2010.

Apax originally acquired Qualitest in 2007 from its founder William Propst. The sale is the firm's third win in the healthcare sector over the past year. It sold Voyager HospiceCare in August to strategic buyer Voyager HospiceCare and last December sold Spectrum Holding Co. in a $230 million secondary sale to Welsh, Carson, Anderson & Stowe.

Skadden Arps Slate Meagher & Flom partners Eileen Nugent and Brandon Van Dyke worked on the deal for Endo Pharmaceuticals. Buddy Gumina, partner and co-head of Apax’ global healthcare segment, worked on the deal for the PE firm. JPMorgan Securities is exclusive financial advisor to Qualitest Pharmaceuticals and Kirkland & Ellis is acting as Qualitest Pharmaceuticals’ legal counsel. 

Qualitest, a portfolio company of Apax Partners since 2007, is the sixth largest generic pharmaceutical company in the US. The private equity firm acquired it and Vintage Pharmaceuticals, both genetic drug makers in Alabama, from founder William Propst. Marvin Samson has taken over as chairman and chief executive of the company and will maintain a role after Endo’s integration of the company.