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 Valeant and Philidor, which has helped to drive sales for the
Canadian drugmaker, have come under fire after influential
short-seller Citron Research said Philidor was being used to create
"phantom accounts" and inflate Valeant's revenue. Valeant has denied
any wrongdoing.
The drugmaker's move on Friday comes a day after the three top U.S.
drug benefit managers, who administer prescription medicine supplies
for health plans, said they had stopped working with the mail-order
pharmacy.
"We have lost confidence in Philidor's ability to continue to
operate in a manner that is acceptable to Valeant," Chief Executive
Michael Pearson said in a statement.
Valeant said this week that it would set up an ad hoc committee to
look into the allegations related to the company's association with
Philidor.
"We understand that patients, doctors and business partners have
been disturbed by the reports of improper behavior at Philidor, just
as we have been," Pearson added.
"We know the allegations have also led them to question Valeant and
our integrity, and for that I take complete responsibility.
Operating honestly and ethically is our first priority, and you have
my absolute commitment that we will make it right."
Philidor accounted for 6.8 percent of Valeant’s total revenue in the
third quarter and the drugmaker said it intended to develop a plan
to ensure minimal disruption to patients' access to drugs.
Express Scripts, CVS Health and UnitedHealth's OptumRx all said on
Thursday that they would stop using drugs dispensed by Philidor due
to concerns about its business conduct.
Shares in Valeant fell heavily in after-hours trading on that news,
reflecting worries about Valeant's future sales growth.
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Valeant shares have lost more than half their value since September
as the company has come under attack on several fronts. U.S.
prosecutors are also investigating the company over drug pricing, a
hot issue in the U.S. presidential campaign.
Pearson told investors this week that if Valeant decided to cut
links to Philidor it "would slow our growth but not dramatically".
Mizuho Securities analyst Irina Koffler said Valeant had taken "a
dramatic, albeit unsurprising" decision in ditching Philidor and the
company would now need to provide updated financial guidance to
stabilize the stock.
Valeant was until recently one of the most popular healthcare stocks
among investors, with its model of rapid acquisition-driven growth.
Its abrupt slide from market darling to a company under fire has
weighed heavily on ValueAct Partners and Pershing Square, two well
known U.S. activist funds.
(Reporting by Ben Hirschler in London and Shivam Srivastavain
Bengaluru; Editing by David Goodman)
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