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Valeant predicts tough 2017 with revenue to decline

By Caroline Humer and Ankur Banerjee

By Caroline Humer and Ankur Banerjee

(Reuters) - Valeant Pharmaceuticals International Inc <VRX.N> <VRX.TO> on Tuesday said that 2017 would be another year of transition with revenues falling as much as 8 percent amid drug price pressure and fewer prescriptions.

Valeant in 2016 changed its business model from selling products through a specialty pharmacy Philidor, which had boosted sales of high-priced dermatology items like toenail fungus treatment Jublia. It had paid for an option to buy the business, but cut ties under investor pressure.

Now Valeant relies on a deal with Walgreens Boots Alliance <WBA.O> pharmacies and on contracts with managed care companies, but it cannot charge the same prices and volume has fallen.

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Still, Valeant predicted that it could grow dermatology and said it sees single-digit growth in the gastrointestinal business, which it gained with its purchase of Salix Pharmaceuticals last year, as well as in Bausch & Lomb eyecare.

The company, which is working to pay down tens of billions in debt it has built up through acquisitions, said that it expects to be able to pay down $5 billion in debt during the 18 month period that began in August of 2016.

It said it has paid down about $1 billion in debt so far and would put the sale of its Dendreon cancer treatment business and three skincare brands for $2.12 billion, announced last month, to that purpose.

Valeant reported a wider fourth-quarter net loss and said it had a better-than-expected quarterly profit before taxes, interest and other items. It said its Bausch & Lomb eyecare business did better than expected.

U.S.-listed shares fell 8.1 percent to $15.36 in early trading compared with a close of $16.71. A year ago, shares closed at $76.95.

Since taking the helm last year, Chief Executive Joseph Papa has been trying to regain investor confidence after the company came under investigation over its accounting and pricing practices.

"It still doesn't appear that management has a realistic outlook on its organic growth," Mizuho analyst Irina Koffler wrote in a research note.

Laval, Quebec-based Valeant has also faced intense political scrutiny for hiking its prices for treatments such as heart drugs Nitropress and Isuprel.

Its net loss widened to $515 million, or $1.47 per share in the fourth quarter ended Dec. 31, from $385 million, or $1.12 per share, a year earlier.

Excluding items, it earned $1.26 per share, beating analysts' average estimate of $1.19, according to Thomson Reuters I/B/E/S.

Selling, general and administrative costs declined 10.5 percent to $665 million. Revenue fell 12.9 percent to $2.40 billion. It sees 2017 revenue of $8.90 billion-$9.10 billion.

(Reporting by Caroline Humer in New York and Ankur Banerjee in Bengaluru; Editing by Sai Sachin Ravikumar and Andrea Ricci)

 
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