Have We Seen Peak Pharma? Valeant Lowers Drug Prices in Walgreens Deal

However, Pearson said a new distribution deal with a prominent US drugstore chain, Walgreens, is a better arrangement than the one with Philidor, a low-profile company that distributed specialty drugs for Valeant. Financial analysts had expected $12.55 billion in projected revenue and earnings per share of $14.27. The company has a market cap of $40.44 billion and a PE ratio of 67.694.

For 2016, Valeant said it expects adjusted earnings will come in between $13.25 to $13.75 per share on revenue of $12.5 billion to $12.7 billion.

The share price has made a 16.76% gain in the past 5 days and has lost -23.42% since 2015 kicked off. Analysts are forecasting earnings per share growth of 29.83% for next fiscal year and 22.88% growth in the next 5 years.

“The opportunity for volume growth is huge”, Pearson said.

The new guidance comes ahead of investor day for Valeant, which begins today.

The consignment agreement calls for Valeant to retain ownership of medications until they are dispensed to patients.

With direct reference to Valeant’s plans to distribute the generic priced branded products, analysts at Morgan Stanley further raised their concerns in their latest report, questioning the amount of Valeant’s discounts that would be retained by Walgreens versus being passed on to payers.

In October, shortseller Citron Research accused Valeant of having inflated revenue, and several news outlets including Reuters reported on how Philidor used aggressive tactics to try to increase insurer reimbursement, mostly for dermatology drugs.

Valeant denied the allegations, characterizing them as part of an effort to drive down the company’s stock price.

“Certainly it influenced our decision to take this move with Walgreens but it’s not the main driver”, he said in an interview Tuesday. “This claim is highly dubious”, Cummings wrote, “given Valeant’s own admissions that it ‘has the right to appoint employees to Philidor including a head compliance officer and an in-house lawyer, ‘ has ‘rights to access Philidor’s books, records and facilities, ‘ and has a ‘joint steering committee, composed of members from Valeant and Philidor'”. Instead, the drugmaker will retain ownership over the therapies and ship the products to the pharmacy, which will enjoy distribution and dispensing fees for its efforts. “We should be measured on that”, Pearson told analysts and investors during a half-day presentation on the company’s commercial operations and research programs.

Congressional committees are examining similar issues.

Valeant says it will drop wholesale prices for branded prescription-based skin and eye-care products by 10 per cent. Walgreens will also distribute more than 30 of Valeant’s branded products at comparable generic prices, starting in the second half of 2016.

Pearson sought to project a more upbeat future on Wednesday.