Another Blow for VRX Stock
At this point, it doesn’t seem that Valeant Pharmaceuticals Intl Inc (NYSE:VRX, TSE:VRX) could buy good news if it offered half of its VRX stock. The company was down five percent on Monday after the U.S. Food and Drug Administration (FDA) approved a generic version of “Nitropress.”
Introductions of generic medicine alternatives almost inevitably drive down the profits of the more expensive name brand, and this should be no different.
“We estimate at approximately 90% gross margins, and little associated SG&A costs, Nitropress represents approximately 4% of Valeant’s YTD 2016 adjusted operating income.”
You may have heard of the heart medication Nitropress before, in what amounted to a rough public relations day for VRX stock: when the company jacked up the price by 525%.
It’s in vogue now for politicians to call out pharmaceutical companies for their price hiking, which may have contributed to the FDA fast-tracking of this generic alternative.
Whatever the reason, VRX stock was predictably hit hard by the news. And if you’ve been following the saga of VRX stock with even detached interest, you’ll know that the last few months have not been kind to the company. Fraud charges toward former executives, investigations, declining share prices; you name it.
Share prices soared as high as $335.00 in mid-2015 before collapsing near the end of the year and continuing that downward spiral throughout 2016. Now VRX stock sits at a comparatively lowly $19.32, or about a 95% decline.
The question is how much more of this can VRX stock take? And, perhaps even more pressing, is there any hope for the shares to regain their once lofty value?
Editor’s Note: Hi, Stephen Karmazyn here. If you enjoyed this article, you can get more of my opinions and commentaries in our popular daily tech letter, Profit Confidential. Published daily, it’s FREE! .