Valeant Pharmaceutics Raised Prices on Needed Drugs, Then Its Stock Took a Hit

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Valeant Pharmaceuticals International Inc. and its billionaire boss, Michael Pearson, have been the subject of some bad press lately, and since then, the company’s stock has taken a tumble.

Some, such as The Wall Street Journal, are bound to chalk this news up to the magical equalizing powers of capitalism’s famous “invisible hand,” while others might point to the democratizing sting of actual journalism as the more potent force in this mix (both might be the stuff of myth these days). Here’s the WSJ’s account, as of Monday:

Shares of Valeant Pharmaceuticals International Inc.VRX.T +1.55% continued their slide Monday, falling more than 10%.

Investors have become increasingly concerned about whether Valeant’s business model is sustainable if regulators crack down on drug price increases.

Valeant, which has been one of the most active acquirers in the pharmaceutical industry, has come under scrutiny for raising prices on certain drugs after acquiring them. Some Congressional Democrats have been pushing the company to provide documents to explain why the company raised prices on two heart drugs.

Over the weekend, the company became the subject of more negative press reports. The New York Times published an article outlining how several consumers have been affected by Valeant’s drug price increase. And an article in Barron’s, which is owned by the Wall Street Journal’s publisher, raised more questions about Valeant’s financials.

Since mid-September, shares of Valeant are down more than 30% and recently traded at $163.95.

And on Tuesday, MSN Money highlighted how the issue of drug-pricing has entered the political realm:

Amid an intensifying debate over drug-price increases that has brought its business practices to the forefront, Valeant Pharmaceuticals International Inc. fired back at critics in the investment community, publicly revealing the benefits it gets from some price hikes for the first time.

Democrats in the U.S. House of Representatives are pushing to subpoena the company for documents relating to drug-price increases, causing Valeant shares to tumble. Morgan Stanley chimed in last week, saying the company is more susceptible to political scrutiny than other drugmakers because it increases list prices more opportunistically. The criticism has added volume to a small chorus of bearish investment researchers dating back months, though most major Wall Street analysts still rate the stock a buy.

Valeant’s increases on list prices for drugs haven’t been as large as those of Turing Pharmaceuticals AG, whose hike on a medication called Daraprim to $750 a pill from $13.50 provoked the ire of Democratic presidential candidate Hillary Clinton. Still, her pledge on Sept. 21 to reform the industry has sent the Nasdaq Biotechnology Index tumbling 12 percent, while Valeant has fallen 27 percent.

House Democrats have highlighted Valeant’s heart drugs Nitropress and Isuprel, whose list prices increased by 212 percent and 525 percent the day that Valeant acquired the rights to sell them. While the company discussed other drugs in a filing Tuesday, it didn’t mention those two.

Read the New York Times article that helped put Valeant in hot water here.

–Posted by Kasia Anderson