Valeant Pharmaceuticals (TSX: VRX) cannot seem to catch a break. After the stock topped $24 at the start of the year, headwinds in the generic drug market, notably in Teva Pharmaceuticals (NYSE: TEVA) and Endo International (NASDAQ: ENDP) stock, pulled VRX stock lower, too.
Investing in one of the biggest, most undervalued drug stocks will need patience. For Valeant, waiting for the company to turn its units around and launch new products worldwide will lead the stock’s reversal.
Valeant’s stock fell on Feb 28 after the company reported earnings that did not demonstrate B+L and Salix revenue growing. The setback may prove temporary if management continues to streamline those business units.
Fortunately, as it refinances its debt, lowers interest payments, and wins product approvals, chances are good that Valeant will win over investors. On March 12, demand was so strong for the $1.25-billion bond refinancing that Valeant upsized the tender offer to $1.5 billion.
On Mar. 14, Health Canada approved the company’s SILIQ (brodalumab) for patients suffering moderate-to-severe plaque psoriasis. Canadians will have access to the drug in the second half of the year. Clearly, revenue from the blockbuster drug will not add to revenue in the short-term.
Valeant must mobilize its sales force, build awareness and educate patients, health care practitioners, and doctors about the effectivness of the drug ahead of the commercial launch.
Takeaway
SILIQ is but one drug in the many products gearing up for launch this year. Each new product matters and every approval from countries will add a small bit of revenue for Valeant.
