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Valeant Pharma investing in R&D; All eyes on Q4 results

(Credit: Michael Nagle/Bloomberg via Getty Images) The Valeant Pharmaceuticals International Inc. logo is displayed on the company's headquarters in Bridgewater Township, New Jersey, U.S., on Wednesday Nov. 4, 2015. The drubbing in Valeant Pharmaceuticals International Inc. is the result of a short seller's false claims going unchallenged in the press, according to a hedge-fund manager with one of the largest stakes in the company. Valeant Pharmaceuticals Headquarters As Investors Rise To Its Defense
March 14
6:44 AM 2016

Suffering from several problems, drug maker Valeant is taking a step back from aggressive decisions to ease concerns among investors. Investment strategy at Valeant has changed now as the drug maker is keen in research and development. Valeant is facing Federal investigation over pricing strategies.

Six months ago, Valeant Pharmaceuticals International Inc was riding high as stock price was soaring on profits made by increasing prices of old and undervalued treatments. Valeant was also on acquiring new drugs without bothering about invention. Now, the situation is totally different. Valeant is facing some challenges like any other pharmaceutical company. 

The New York Times reports that Valeant Pharmaceuticals is finding it difficult to convince shareholders about business plan. The top management of the company discarded the big acquisition plans and new business models to focus on investing in research and development (R&D) activity and repaying its debt. Valeant has over $30 billion debt burden.

Valeant's fourth quarter results are scheduled for announcement on 15 March 2016. The results were delayed by two weeks. Valeant's Chief Executive J Michael Pearson unexpectedly reported back to duty from an extended medical leave. Investors and market analysts are looking forward to fourth quarter results for more hints on its future plans. 

Analysts also look to fourth quarter results as they're expected to give answers about accounting model. Analysts and investors brought to the notice of US securities regulators about the quality of financial disclosures. Hence, US securities regulators have commenced an investigation into Valeant's financial details. Some politicians also raised voice against the company's gouging of customers with high prices, as reported by Financial Times.

David Steinberg, an analyst for Jefferies, said "We haven't seen a financial statement out of the company in almost five months and during this period there was a lot of turmoil. So the company needs to show their employees and the investment community that the wheels haven't fallen off."

The New York Stock Exchange (NYSE) listed Valeant Pharmaceuticals International Inc has been in criticism over its financial numbers. Some directors expressed their worry that Pearson's focus was mostly on profits and his fast-paced decisions couldn't address the increasing severity of problems. The Wall Street Journal (WSJ) has reported that company was acquiring rights to certain treatments and also immediately increasing prices steeply. 

Valeant's stock price fell to below $70 from $225 six months ago. This sharp fall dampened investors' confidence. Adding to this, Federal investigation over Valeant's pricing strategies is also further weakened the market confidence. Valeant has a tie up with mail-order pharmacy Philidor Rx Services. This mail order company helps insurance companies to substitute cheaper generic alternatives from Valeant's high priced products. 

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