Valeant Pharmaceuticals International said yesterday it was cutting ties with pharmacy Philidor Rx Services and the pharmacy was shutting down.
The move was part of a defence to allay concerns about the downside of its dealings with the pharmacy the morning after big pharmacy chains said they would cut it from their networks.
Valeant also said it would bolster its internal investigation into the matter by adding an outside lawyer who once worked in the US department of justice to the team.
The drugmaker’s move comes amid growing pressure from investors after Valeant disclosed two weeks ago that it was under investigation by the US government over its patients’ assistance programme and drug-pricing and distribution
Valeant shares fell 9.1 percent yesterday and remained off during investor Bill Ackman’s conference call, trading at $101.31.
They have given up more than a third of their value since the company disclosed that Philidor pharmacy distributed drugs making up 6 per cent of Valeant revenue this year and are well off their peak on August 5th of $263.70.
Influential short-seller Citron Research was one of the first critics to call the company out on Philidor in a report, saying Valeant was using the pharmacy set-up to inflate revenue.
Valeant has denied any wrongdoing.
Valeant disclosed this week that it had paid $100 million for an option to buy the business.
Ackman, whose Pershing Square Capital Management has a 6.3 per cent stake in Valeant, told investors yesterday that “life will go on” for the company as it continues to sell high-demand products such as Bausch & Lomb contact lenses.
“We think the Valeant business is quite robust,” Ackman said on a widely attended conference call. He said shares were undervalued.
“One criticism of [Valeant chief executive Mike Pearson] has been that he is so disciplined on costs that he could be seen as being a little cheap on hiring on the PR side,” Ackman said.
The hedge fund swept up 2.1 million additional Valeant shares last week as the stock plummeted, making Pershing Square the company’s second largest shareholder, leapfrogging asset manager T Rowe Price. – (Reuters)
