Valeant Agrees to Drug Pricing, Distribution Pact with Walgreens
It is important to point towards the fact that shares of Valeant Pharmaceuticals have come under severe selling pressure ever since the company cut ties with mail order pharmacy Philidor, saying it had lost confidence in the company’s operations. Walgreens will become Valeant’s distributor.
Separately, Walgreens has agreed it will distribute over 30 branded products of Valeant, where generics are available and at generic prices.
Pearson had previously said that Valeant would take a short-term hit, including by focusing on debt reduction, in order to ultimately secure long-term gains.
Walgreens, headquartered in Deerfield, Ill., has 8,000 outlets in the U.S. The idea is that this easy access will help drive volume in the long-term.
“We believe that we are entering a new era of growth and opportunity as we continue to build and grow our businesses around the world and deliver medicines and products at affordable prices that improve the lives of patients”, he said in a statement issued with the new earnings guidance. This move will mean that Valeant will have to discount its branded products to be at the same price level as generic products. At this current moment, the FTC is investigating VRX with regard to their control of the lens sector and the idea that the company used Philidor to falsify sales and avoid auditory scrutiny has created a big issue. The controversial female libido pill Addyi will also be included as part of the Walgreens arrangement.
Valeant will pay Walgreens for distribution and dispensing fees.
In October, the Quebec-based company severed ties with a USA mail-order pharmacy that distributed specialty drugs for Valeant.
By having a new revenue stream: Walgreens will see revenue growth from distribution and dispensing fees that Valeant will be paying the company.
Scotiabank reissued a “sector outperform” rating and issued a $295.00 target price on shares of Valeant Pharmaceuticals Intl in a research note on Monday, August 24th. “Several of Valeant’s drugs are still excluded from [pharmacy-benefit managers’] formularies and in our view it is unlikely that CVS or Express Scripts would be willing to strike a long-term agreement with Valeant to dispense many drugs they now exclude from formulary unless there was an even more meaningful overhaul of the pricing structure”, he wrote. (NASDAQ:WBA) to sell clients medication at lower prices.
The company will host a meeting with investors in New Jersey later Wednesday.
This agreement also covers Valeant’s over-the-counter product portfolio.
Lastly, the CEO of Valeant on CNBC stated that there are not going to pursue any acquisitions in 2016.
The drug giant also slashed its 2015 Q4 and 2016 year-long earnings forecast on Tuesday during a conference call with investors. Most importantly, Valeant is expecting three more drugs to be approved next year – news that has potential to drive the stock higher if the drugs have sustainable and lucrative estimated revenue streams.