The largest shareholder in Endo Pharmaceutical Holdings Inc. demanded that the Chadds Ford specialty drugmaker explore a sale of the company before hiring a new chief executive to replace Peter A. Lankau, who steps down tomorrow.

The company says it has no plan to sell.

D.E. Shaw Valence Portfolios L.L.C., and its affiliates, which own 9.8 percent of Endo's outstanding shares, asked the board in a letter Wednesday to immediately retain an investment bank to explore strategic alternatives to increase shareholder value.

Endo declined to respond in detail to the shareholder demands. The company said in a statement that senior management and the board were "fully committed to maximizing shareholder value" and were "attempting to achieve this goal by, among other things, expanding and diversifying our product offerings through licensing and acquisitions."

Endo has not retained an investment bank to explore a sale of the company. Management and the board continue to pursue licensing deals, or acquisitions, of promising products to grow revenue, said Endo spokesman Bill Newbould.

"Any public company is always for sale," he said, "but, no, we have not hired a bank to pursue a sale of the company."

D.E. Shaw's managing director, James Mackey, first wrote Endo CEO Lankau on July 30 and wrote the board on Oct. 8, the shareholder said in a federal regulatory filing.

"We have several concerns," D.E. Shaw said. "We are strongly opposed to the company's strategy of acquiring companies or in-licensing expensive assets, especially in new therapeutic segments outside of the company's core expertise in pain management."

Endo currently has no head of drug research and development, the shareholder said, and "recent development efforts have been marred by numerous setbacks and delays."

D.E. Shaw, which owns 13.2 million Endo shares, noted that the board has refused to meet with the investor.

It said Endo has been "overly focused on the need to complete a large acquisition or in-licensing deal, rather than on optimizing the value of its existing business," including lead pain products Lidoderm, a patch to treat shingles pain, and Opana, a tablet for mild to moderate pain, and Endo's "profitable generic pain business."

The company "has a history of involving itself in value-destroying product-licensing deals," the D.E. Shaw letter said.

"This myopic focus on potential noncore-business-development activities has shifted the company's focus away from optimizing its increasingly cash-rich balance sheet."

On Jan. 28, the company announced after the stock markets closed that Lankau had resigned as president and chief executive, effective March 1.

Newbould, the company spokesman, said at the time that Lankau and the board "weren't in total sync" and had "a difference of philosophy, and so the board and he thought it best that they part ways."

Newbould said yesterday that the board and Lankau "were aligned on the strategic direction" of the company, but "they no longer were seeing eye to eye. It wasn't about where to take the company; it was speed of execution."

Newbould said D.E. Shaw was the only shareholder to date to express the concerns raised by the investor.

Endo reported last week that its fourth-quarter profit more than tripled. The company raised its 2008 outlook, expecting sales to be between $1.225 billion and $1.250 billion this year.

D.E. Shaw noted in its letter that the "high-quality" earnings were based on the strength of Endo's core pain business.

If a strategic review does not result in a sale, the shareholder said, Endo should hire a new CEO with a "clear vision" for strengthening Endo's key pain business, a "strong commitment" to cutting costs and maximizing profitability, and a track record for commercializing products and getting drugs through research and development.

Endo is actively searching for a new CEO, the company said.

The shareholder also urged Endo to repurchase $1.5 billion of the company's outstanding common equity through a self-tender with existing cash and new debt.

D.E. Shaw said it will consider other steps if the company does not address its concerns. "We will not hesitate to hold the company's directors accountable should the company seek to utilize its cash-rich balance sheet and positive cash flows to pursue any non-core acquisitions or in-licensing deals," the shareholder said.

Endo shares closed down 76 cents, or about 2.8 percent, to $26.26 on the Nasdaq market. The shares have traded in the range of $23.25 to $35.85 the last 52-weeks.