Hillary Clinton Is Targeting Valeant Pharmaceuticals Intl Inc.

Valeant Pharmaceuticals Intl Inc. (TSX:VRX)(NYSE:VRX) has a number of targets on its back.

| More on:
The Motley Fool

Valeant Pharmaceuticals Intl Inc. (TSX:VRX)(NYSE:VRX) shares plunged once again on Thursday after Hillary Clinton called out the company at a campaign appearance. Here is what she had to say:

This is a letter from someone who’s here. And she gave me this letter. She has to take a brand name drug. She’s been taking it since the early 1980s. At that time, back in the 1980s, for the same drug, it cost approximately $180 for 10 shots. The latest refill she received from her pharmacy was $14,729.99 for the same 10 vials. And the company is one of these companies that is absolutely gouging American consumers and patients. It’s called Valeant Pharmaceuticals. I’m going after them. We are going to stop this. This is predatory pricing. It is unjustified. It is wrong. And we’re going to make sure it is stopped.

At the end of these remarks, the Iowan crowd gave her a standing ovation, which is a fair reflection of how Americans feel about the issue.

So what exactly does this mean for Valeant?

The stars are aligned

Normally, it is very difficult to get legislation passed in Washington. But this issue has strong bipartisan support. To illustrate, in a recent survey by the Kaiser Family Foundation, 83% of Americans favour the idea of letting Medicare negotiate for lower drug prices, including 74% of Republicans.

With that kind of bipartisan support, there’s a chance of legislation even if a Republican gets elected. For what it’s worth, Donald Trump has said that Medicare should negotiate for discounted prices.

Alarmingly for Valeant, the company can’t even get any support from PhRMA, the pharmaceutical industry’s main lobby group. Back in October PhRMA posted an article on its website entitled “What makes Valeant different than innovative biopharmaceutical companies?” PhRMA noted in the article how Valeant spent only 3% of revenue on research and development in 2014 and compared the company to the much-maligned Turing Pharmaceuticals.

Is the stock still cheap enough?

There are a lot of people who still think Valeant is worth owning. To illustrate, 13 analysts rate the stock “Strong Buy” or “Buy” while only one rates the stock “Underperform,” according to Yahoo Finance. And it’s easy to see why–the company trades at a massive discount to its peers.

But let’s not forget that Valeant is the subject of a number of investigations, and we still haven’t gotten to the bottom of its relationship with Philidor. Making matters worse, the company has US$30 billion in debt, so there isn’t much room for error. In my opinion, the stock is simply too risky and there are better options for your portfolio.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Benjamin Sinclair has no position in any stocks mentioned. Tom Gardner owns shares of Valeant Pharmaceuticals. The Motley Fool owns shares of Valeant Pharmaceuticals.

More on Investing

Glass piggy bank
Dividend Stocks

How to Accelerate Your TFSA Returns From Dividend Stocks

The stock market saw a correction in January, as investors booked profits ahead of the central bank’s interest rate hikes. The TSX …

Read more »

money cash dividends
Dividend Stocks

Top 3 Dividend Stocks in Canada for 2022

Canada is home to some of the best dividend stocks in the world. With finance, telecoms, and energy dominating the …

Read more »

Shopping and e-commerce
Tech Stocks

Can Shopify Recover to New All-time Highs in 2022?

With more than 1.7 million merchants on its platform, Shopify (TSX:SHOP)(NYSE:SHOP) is undoubtedly a core platform for SMBs. The company’s software-as-a-service platform …

Read more »

calculate and analyze stock
Dividend Stocks

2 Top TSX Stocks to Put on Your TFSA Buy List

TFSA investors are searching for undervalued TSX stocks to buy that have the potential to deliver big gains in 2022. …

Read more »

Payday ringed on a calendar
Dividend Stocks

Get Unbelievable Monthly Income With High-Yield Dividend Stocks

The only thing better than a dividend stock is a stock that pays dividends every month. For people who live …

Read more »

gas station, convenience store, gas pumps
Dividend Stocks

1 Key Catalyst Investors in Couche-Tard Stock Need to Watch

One of the top value stocks on the TSX, Alimentation Couche-Tard (TSX:ATD) has been a strong performer over the past year. …

Read more »

Value for money
Dividend Stocks

2 Top Value Stocks I’m Looking to Buy Right Now

Value investing is a lot more than just grabbing stocks that look inexpensive. The shares of an organization in permanent …

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Tech Stocks

The 5 Best High-Growth TSX Stocks to Buy on the Dip

The broader market selling, primarily in high-growth stocks, provides a solid opportunity for investors to buy future winners at lower …

Read more »