Valeant Surges on Drug Distribution Agreement With Walgreens
The shares rose in early trading, and were up 2.7 percent to $112.55 before the market opened in NY, after falling as much as 6 percent earlier.
However, the Quebec-based company says a new distribution deal with the prominent Walgreen pharmacy chain will be better than its arrangement with Philidor, a low-profile company that distributed specialty drugs for Valeant. It gave investors more direction on Tuesday, announcing a distribution deal with Walgreens Boots Alliance Inc.to help replace Philidor sales.
The drugmaker said in October that it was ending its relationship with Philidor, which used aggressive business practices to push Valeant’s products.
“Why people challenge what we’re doing is we do things unconventionally”, he said. The company now has an average rating of “Buy” and an average price target of $163.62. The stock’s slide worsened when the Philidor allegations emerged, and shares hit a $69 low.
Valeant Pharmaceuticals International (VRX) announced Tuesday morning that it has reached new fulfillment agreements with Walgreens. Valeant is also counting on the drug discounts to win back its hurt reputation and boost the stock price. The price action on heavy volumes is a clear indication of the shift of momentum towards the buy side. Customers would benefit from the patient access program, in which it offers coupons or zero co-pays to cut the patient price. The 20-year partnership calls for Valeant Pharmaceuticals to give Walgreens a 10% discount off its branded prescription-based dermatological and ophthalmological products as well as Valeant’s over-the-counter product portfolio. That also misses average analyst expectations for $14.20 per share.
A Valeant statement, issued two hours before the 8 a.m. meeting, said it’s lowering estimates for revenue and adjusted earnings for the fourth quarter and full year ending December 31.
Patient advocates, doctors and Congressional leaders have attacked Valeant and drug companies like Turing Pharmaceuticals for aggressively increasing prices on some critically needed prescription drugs with little or no competition. In the United States, more than 8,000 Walgreens pharmacies will cover Valeant’s medicines, including acne products Solodyn, Retin-A Micro, eye drop Alrex and toenail fungus drug Jublia.
For 2016, Valeant expects total revenue in the range of $12.5-12.7 billion and adjusted EPS to lie within $13.25-13.75 per share.
Vetr lowered shares of Valeant Pharmaceuticals Intl from a strong-buy rating to a buy rating and set a $122.10 price target on the stock.in a research report on Monday, October 26th.