How Valeant Pharmaceuticals Has Fared in 2018



Generic competition

Pharmaceutical companies such as Valeant Pharmaceuticals (VRX) face heightened competition from generic pharmaceutical manufacturers when patents covering currently marketed products expire or are successfully challenged. Moreover, generic versions are priced lower than branded products and may be preferred under third-party reimbursement programs. Therefore, branded products’ prices can be impacted by generics.

In US markets, Valeant products facing competition from generics include Ammonul, Atralin, Carac, Edecrin, Glumetza, Isuprel, and Nitopress. According to the company, products facing a potential loss of exclusivity in 2018 include Cuprimine, Elidel, Lotemax, and Zovirax. These products represent 7% of the company’s US revenue.

Major customers

Valeant Pharmaceuticals promotes its products to physicians, hospitals, pharmacies, and wholesalers through its sales force. While the US contributed most of the company’s revenue (~65%) in 2016, Canada, China, and Japan contributed 3%, 3%, and 2%, respectively.

Valeant receives ~45% of its total revenue from three major customers. In fiscal 2016, its three major customers were McKesson (MCK), Cardinal Health (CAH), and AmerisourceBergen (ABC), which contributed 21%, 15%, and 13% of its total revenue, respectively.

Stock performance

Over the last year, Valeant stock has risen 20% to ~$18. Since January 2018, the stock has fallen 26%, from ~$26 to ~$18. In comparison, peers Gilead Sciences (GILD), Horizon Pharma (HZNP), and Jazz Pharmaceuticals (JAZZ) have risen 8%, 7%, and 2.3% in the past month.

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