Valeant says can contain hit to dermatology, projects 2016 growth

Wed Dec 16, 2015 1:56pm EST
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By Caroline Humer and Carl O'Donnell

(Reuters) - Drugmaker Valeant Pharmaceuticals International Inc (VRX.TO: Quote) (VRX.N: Quote) on Wednesday said that fourth-quarter profit was hit when it cut ties with pharmacy Philidor Rx Services, but that it could contain the damage next year and grow profit.

The company said it would rebuild lost business through a distribution agreement with Walgreens pharmacies announced on Tuesday, and said the arrangement would also help sales of products like Xifaxin for irritable bowel syndrome and Addyi, a new sexual dysfunction treatment for women.

The Canadian drugmaker forecast 2016 earnings would grow 30 percent to $13.25 to $13.75 per share off a lowered 2015 outlook, just below Wall Street's highest expectations.

Valeant shares rose 8 percent to $118.75 in New York trading, gaining ground as Chief Executive Michael Pearson led investors through a four-hour meeting in which he defended the company's plan to rebuild its dermatology business.

In October, shortseller Citron Research accused Valeant of having inflated revenue, and several news outlets including Reuters reported on how Philidor used aggressive tactics to try to increase insurer reimbursement, mostly for dermatology drugs. Valeant has denied the shortseller accusations and a board committee is investigating the Philidor situation.

The news had knocked shares from an August high of $263.70 to a low of $69.34 on Nov. 18. They have since recovered, helped in part as its largest investor, Bill Ackman's Pershing Square Capital Management, increased its stake.

Pearson declined to give an update on the investigation, or comment on investigations by U.S. prosecutors in New York and Massachusetts and by Congress over the company's history of price increases and its patient access programs.

He denied that the company was considering a break-up, a possibility raised by large investors as a way to recover value, and told investors that the Philidor situation was behind them.   Continued...

The headquarters of Valeant Pharmaceuticals International Inc., seen in Laval, Quebec November 9 2015.   REUTERS/Christinne Muschi