- Category: Economic
- Published Wednesday, December 16, 2015
- CTV News
Embattled Valeant Pharmaceuticals is slashing its expectations for the current quarter and 2015 as a whole and issuing a guarded outlook for next year as well.
Valeant is lowering its per-share profit expectations for the year, reported in U.S. currency, from between $11.67 and $11.87, to between $10.23 and $10.33. That's well short of the analyst estimates.
The drugmaker's outlook for the fourth quarter ending Dec. 31 has been lowered to between $2.55 and $2.65 a share. Analysts expected $3.47 per share and the company's previous estimate was between $4.00 and $4.20 per share.
Valeant's press release didn't specify the reason for the reduced expectations -- which come as the Quebec-based company faces investor dissatisfaction over its handling of a controversy over its pricing and distribution practices, which are being investigated by U.S. authorities.
Chief executive Michael Pearson and other Valeant executives will face questions from analysts at a company briefing this morning.
In October, the Quebec-based company severed ties with a U.S. mail-order pharmacy that distributed specialty drugs for Valeant. It also announced on Tuesday that it will deliver up to US$600 million in annual savings to the U.S. health-care system starting next year after agreeing to cut prices as part of distribution agreements with the large Walgreens retail chain.
Valeant says it will drop wholesale prices for branded prescription-based skin and eye-care products by 10 per cent. Walgreens will also distribute more than 30 of Valeant's branded products at comparable generic prices, starting in the second half of 2016. The average price decrease is expected to be more than 50 per cent, and range between five and 95 per cent.
The company's shares are already down more than 20 per cent for the year, closing Tuesday at C$149.75 on the Toronto Stock Exchange.
Valeant's price cuts don't apply in Canada where the Laval-based company doesn't have similar distribution agreements with pharmacy retailers such as Shopper's Drug Mart, Jean Coutu or the Rexall Group.
The new distribution agreement with Walgreens -- a chain with more than 8,000 retail outlets -- follows Valeant's decision in October to sever ties with mail-order pharmacy Philidor Rx Services. That relationship came to light as a result of a court battle between Valeant and another mail-order pharmacy.
Valeant has been accused of using Philidor to create a network of "phantom pharmacies" to steer pharmacy benefit managers toward Valeant's more expensive drugs, rather than cheaper alternatives.
With files from The Associated Press and the Canadian Press.