Valeant CEO sees new drug pricing environment ahead
By Caroline Humer
(Reuters) - Valeant Pharmaceuticals International Inc (VRX.TO: Quote), which has been criticized for raising drug prices and is being investigated by the U.S. government, predicted on Monday that lower price increases are ahead for the whole industry.
Valeant Chief Executive J. Michael Pearson told investors the company's 2016 outlook is based on expectations for a new pricing environment where none of its drugs have an actual price increase of more than 10 percent.
Valeant shares fell 7.7 percent, or $13.73, to close at $163.83 on the New York Stock Exchange.
Concerns about drug pricing have loomed over pharmaceutical stocks since last year and the sector's shares have fallen sharply in the past few weeks since Democratic presidential candidate Hillary Clinton criticized the price rises on the campaign trail.
"The pharmaceutical industry is being aggressively sort of attacked for past pricing actions," Pearson said. "I do think, given that environment, the pricing that pharmaceutical companies will take in the future will be more modest."
Valeant, which has become one of the world's largest drug companies through a steady stream of acquisitions, and others have been criticized for acquiring companies and raising the prices of drugs in order to boost profits. Federal prosecutors in New York and Massachusetts opened investigations into the company, asking for information about price increases as well as the workings of its patient assistance programs for poor people to access its drugs.
Pearson said Valeant was unlikely to look for acquisitions based on what he called mispriced assets, or drugs with prices that can be significantly increased because of their value to health care.
"Given the evolution of our product mix, coupled with the recent events, it is likely that we will pursue fewer, if any, transactions that are focused on mispriced products," he said. Continued...