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How Critical Is Valeant’s Pipeline to Its Success?

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Valeant’s efficiency in terms of R&D

Valeant’s (VRX) prospects depend on the success of its pipeline candidates, since they can drive the pressured top line of the much-troubled company. For details on Valeant’s turmoil, please read Valeant: The Rise and Fall of a Giant Specialty Pharmaceutical.

Valeant expects to launch more than 20 new products in 2016. Although the company has been criticized for lower R&D (research and development) with respect to sales, it claims to hold efficient R&D in terms of number of NMEs (New Molecular Entities) per billion dollars spent.

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Why isn’t latanoprostene bunod approved yet?

On July 22, 2016, Valeant received a complete response letter from the FDA (U.S. Food and Drug Administration) for its NDA (New Drug Application) for latanoprostene bunod, an ophthalmic solution. The FDA’s concerns were over the inspection for Current Good Manufacturing Practices regulations at its Bausch & Lomb plant. There weren’t any safety or efficacy issues regarding the drug. Valeant plans to find a solution and address the concerns after meeting with the FDA.

The eye drop is indicated to lower increased intraocular pressure in patients suffering from open-angle glaucoma or ocular hypertension. According to a Valeant news release, the product holds peak sales potential of $500 million in the United States and $1 billion around the globe. The companies that operate in the ophthalmic space include Shire (SHPG), Regeneron (REGN), and Akorn (AKRX).

To remain on the safer side and still have exposure to a potential winner such as Valeant, you can choose to invest in ETFs. One such option is the VanEck Vectors Pharmaceutical ETF (PPH). Valeant Pharmaceuticals accounts for 1.6% of PPH’s total holdings.

Next, let’s look at Valeant’s operational efficiency compared to its peers.

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