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Why Valeant Pharmaceuticals Is Getting Investors' Attention

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Part 5
Why Valeant Pharmaceuticals Is Getting Investors' Attention PART 5 OF 13

Xifaxan Expected to Witness Robust Growth in 2017

Gastrointestinal business

In 2016, Valeant Pharmaceuticals’ (VRX) gastrointestinal (or GI) franchise saw its revenue fall due to the loss of patent protection for drugs Zegerid and Glumetza in the US market. Furthermore, the authorized generic version of Zegerid was transferred from Valeant’s Branded Rx segment to the Diversified Products segment. However, these negative trends were partly offset by the robust performance of GI drugs Xifaxan, Apriso, and Uceris.

Valeant expects its GI franchise to see low-single-digit revenue growth in 2017. The company has projected higher-single-digit revenue growth for its GI franchise in the years beyond 2017.

If the company manages to surpass these revenue projections, its share price and that of the Global X Top Guru Holdings Index ETF (GURU) may be positively affected. Valeant makes up about 0.19% of GURU’s portfolio.

Xifaxan Expected to Witness Robust Growth in 2017

Xifaxan Expected to Witness Robust Growth in 2017

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Xifaxan trends

In 2016, Xifaxan prescriptions rose 18% on a year-over-year (or YoY) basis. In 1Q16, Valeant entered into contracts with managed care organizations to provide IBS-D (irritable bowel syndrome with diarrhea) patients access to Xifaxan. This development, however, reduced Xifaxan’s net selling price in 2016.

Valeant has recruited a new sales force team for promoting Xifaxan as an IBS-D therapy to primary care practitioners. Xifaxan is expected to enable Valeant to compete with GI players GlaxoSmithKline (GSK) and Takeda Pharmaceutical (TKPYY).

To further improve the drug’s market penetration, Valeant has planned to initiate development of a next-generation, patient-friendly formulation of Xifaxan in 2H17. This formulation could also help expand the drug’s intellectual property estate, which could prove to be of high importance in litigations related to Xifaxan.

In 2018, Valeant expects to compete with Allergan (AGN) and others for abbreviated new drug applications (or ANDAs) seeking approval for a generic version of Xifaxan. However, the company is confident of protecting its drug from generic erosion as patents are expected to provide protection to Xifaxan up until 2029. In the next article, we’ll explore trends for Valeant Pharmaceuticals’ GI drug, Relistor, in greater detail.

 

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