Source: Flickr via user Images Money.

What: Shares of Endo International plc (NASDAQ:ENDP) dropped by more than 40% today on roughly seven times the stock's normal volume. The drugmaker's stock is tumbling after management slashed the company's full year annual guidance for both total revenue (cut by 11% from its former high end estimate), and adjusted earnings per share (revised downwards by 23%). Endo's revised outlook stems from the loss of exclusivity for the anti-inflammatory medicine Voltaren Gel, as well as increasing competition in the generic drug space. 

So what: Endo's problems spilled over to its peers today, dragging down shares of nearly every company with a footprint in the generic-drug arena. For example, Allergan (NYSE:AGN) saw its shares print new 52-week lows in the wake of this news, and Valeant Pharmaceuticals (NYSE:BHC) lost more than 13% of its value today, as well. 

AGN Chart

AGN data by YCharts.

Now what: The magnitude of these revisions seems to be the real problem. In a nutshell, analysts are questioning how management got it so wrong in the first place, and whether they even have a reliable estimate in place now. If not, Endo could continue to slide until the generic drug market finds a bottom.

Looking ahead, Allergan is set to release its earnings next week, which should provide additional insight into the generic drug space as a whole. Endo shareholders therefore may want to check out what Allergan's management has to say in its upcoming first-quarter conference call.

In the meantime, I think investors are best served by taking a wait-and-see approach with Endo. While this stock seems to offer strong value after this hefty sell-off, it's important to bear in mind that the market has shown little patience with pharma companies after Valeant's well-documented problems earlier this year.

In other words, the worst may be yet to come for Endo. Stay tuned.