Valeant Pharmaceuticals International (VRX)
from Cabot Benjamin Graham Value Investor
Acquisitions and expanding sales are just two of the reasons investors might take a look at today’s pick. This company develops drugs for the global specialty pharmaceutical market, and has recently tripled its annual sales.
Valeant Pharmaceuticals International (VRX) is an international specialty pharmaceutical company that discovers, develops, manufactures and markets a broad range of pharmaceutical products.
Valeant has developed drugs in almost all areas of medicine with a slightly higher emphasis on neurology and dermatology products. Its drugs include prescription and generic brands; in all about 900 pharmaceutical products are marketed globally.
The 2010 merger with Biovail tripled Valeant’s sales. The marriage has produced better than expected results and includes a vast array of products and marketing capabilities throughout the world.
Management is aggressively acquiring small companies with the potential to immediately add earnings (a process commonly called accretive). Valeant has acquired 50 companies during the past four years. During the past 12 months, Valeant purchased 12 companies, highlighted by the acquisition of Medicis Pharmaceutical for $2.6 billion and Bausch & Lomb for $8.7 billion. The purchases are expected to be immediately accretive to Valeant’s earnings.
VRX is high risk because of its high volatility and the company’s short history since its merger with Biovail.
J. Royden Ward, Cabot Benjamin Graham Value Investor, www.cabot.net, 978-745-5532, November 14, 2013