How Walgreens Gives Valeant a Shot in the Arm

Valeant Pharmaceuticals has a new distribution deal with Walgreens, sending shares of the beleaguered Canadian drug company up sharply in morning trading.

Monashee Investment Management eliminated its position in shares of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) during the third quarter, according to its most recent filing with the Securities and Exchange Commission (SEC).

Generic prices will also be available for more than 30 over-the-counter Valeant products, so long as there's a generic alternative available.

Valeant was a highflier through its acquisition of other drugs as well as drug companies and then raising the prices of drugs, instead of the traditional industry growth method of discovering new treatments through both research & development.

Valeant Pharmaceuticals Intl Inc (NYSE:VRX)'s stock had its "hold" rating reiterated by research analysts at Morgan Stanley in a research report issued on Tuesday, ARN reports.

"This is going to drive growth", Valeant CEO Michael Pearson said during a CNBC interview. On average, analysts anticipate that Valeant Pharmaceuticals Intl will post $2.89 earnings per share for the current year.

Patient advocates, doctors and Congressional leaders have attacked Valeant and other drug companies like Turing Pharmaceuticals for aggressively increasing prices on some prescription drugs. The ratio has worsened, as 251 hedge funds opened new or increased stock positions, while 303 sold and trimmed holdings in Valeant Pharmaceuticals International.

The products will be sold on consignment and Walgreens will be paid a distribution and dispensing fee.

The agreements reached with Walgreens are aimed at lessening the anxiety of people by linking up with a name that is recognizable and the largest chain of pharmacies in the U.S. Valeant andWalgreens hope to expand the relationship to include other therapeutic areas over time.

Valeant said its 20-year-agreement would allow customers to buy certain products at lower out-of-pocket costs from more than 8,000 Walgreens stores, as well as an unspecified number of participating independent retailers.

The news of the new distribution agreement comes just a month and a half after ending a distribution contract with a specialty pharmacy accused of unethical business practices. Valeant said it believed its accounting of Philidor was appropriate, but appointed a committee of some of its directors to review allegations about its relationship with the specialty pharmacy.

So far this year, shares in Valeant are down more than 33 percent.

CVS and Express likely will not agree "to dispense many Valeant drugs they now exclude from formulary unless there was an even more meaningful overhaul of the pricing structure", Larsen said.