Valeant unveils drug pricing, distribution pacts with Walgreens

Valeant’s pricing practices have been under investigation by the U.S. Congress since the company dramatically increased prices for some specialty products this year. In this case, we took advantage of the high volatility of Valeant stock, its extremely low share price, and the high degree of market uncertainty in choosing to build a position that offered us a compelling reward for the potential risk. Jefferies Group dropped their price objective on Valeant Pharmaceuticals Intl from $224.00 to $172.00 and set a “buy” rating for the company in a report on Monday, November 2nd.

Valeant, which is expected to discuss the plan at an investor meeting on Wednesday morning, forecast in a press release that another closely watched metric, cash earnings, would be $6.9 billion to $7.1 billion in 2016.

For its full-year, Valeant is anticipating its adjusted profit will be between $10.23 and $10.33 per share with sales of between $10.4 billion and $10.5 billion.

Valeant had previously disclosed that it had purchased an option to buy Philidor, which it used to help deliver drugs more quickly to patients through the mail. Under the terms of the deal, Walgreens has a 20-year agreement to fill prescriptions for Valeant’s dermatological and ophthalmological products at a 10% discount.

According to Zacks Investment Research, “Valeant Pharmaceuticals International, Inc.is a pharmaceutical company that develops, manufactures and markets a broad range of pharmaceutical products primarily in the areas of neurology, dermatology and branded generics”.

Valeant Pharmaceuticals says it’s on the road to recovery after taking big financial and PR hits from its association with a controversial US mail-order pharmacy. The Company’s developed markets segment consists of sales in the United States of pharmaceutical products, OTC products, and medical device products.

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.

Stung by criticism that it jacked up the price of lifesaving medicines, Valeant Pharmaceuticals said Tuesday it will lower some prices though an agreement with Deerfield-based Walgreens, the nation’s largest pharmacy retailer. The stock had soared past $260 to a new all-time high price as recently as August, but Valeant shares have largely plummeted since then.

The company said it will pay down $2.25-billion in debt, including mandatory payments and maturities.

“Investors were looking for a definitive track forward for Valeant (in a post-Philidor world) with its pharmacy and distribution strategy”, Umer Raffat, an analyst at Evercore ISI, wrote in a note to clients. Valeant said it would sever all ties with Philidor and has defended its accounting and distribution practices.