Valeant Inks Deal with Actavis - Analyst Blog

By
A A A

Valeant Pharmaceuticals ( VRX ) recently entered into an agreement with Actavis Inc. ( ACT ). As per the agreement, effective immediately, Actavis will exclusively market and distribute an authorized generic of Valeant's Zovirax ointment. 

The agreement allows Actavis to record all the net sales of the generic ointment while Valeant will receive a share of the same. The other terms of the agreement were not disclosed.

Actavis will also have the exclusive rights to co-promote Zovirax cream to obstetricians and gynecologists in the US by using its existing Specialty Brands sales and marketing structure.

In return, Valeant gained exclusive right to co-promote Actavis' Cordran Tape (flurandrenolide) in the US, which is indicated for treating inflammation and itching caused by skin allergic reactions, eczema and psoriasis.  

Valeant will co-promote the drug using its dermatalogy sales and marketing structure for a co-promotion fee on sales.

We note that Zovirax (ointment) is indicated for the management of initial genital herpes and limited non-life threatening mucocutaneous herpes simplex infections in immuno-compromised patients.

Zovirax cream is indicated for the treatment of recurrent herpes labialis (cold sores) in patients above 12 years.

We believe that Valeant is now making efforts to somewhat offset the adverse impact of Mylan's ( MYL ) recent launch of the first generic version of Zovirax ointment.

Mylan recently received approval from the US Food and Drug Administration (FDA) to sell the first generic version of Zovirax ointment.

Consequently, Valeant cuts its earnings guidance for 2013 as Zovirax accounted for 7% of Valeant's total revenue in 2012. Valeant estimates the launch of Mylan's generic version to adversely impact its bottom line on a cash basis by 30 to 40 cents in 2013.

Concurrent with the fourth quarter results in Feb 2013, Valeant reaffirmed its guidance provided in January. Earnings per share were then projected around $5.45 - $5.75.

Valeant intends to provide an updated guidance in May along with its first quarter 2013 results.

It remains to be seen if Valeant is able to shield its top-line growth following the entry of generics.

Valeant currently carries a Zacks Rank #3 (Hold). Right now, Avanir Pharmaceuticals Ltd. ( AVNR ) looks better positioned with a Zacks Rank #2 (Buy).



ACTAVIS INC (ACT): Free Stock Analysis Report

AVANIR PHARM (AVNR): Free Stock Analysis Report


MYLAN INC (MYL): Free Stock Analysis Report

VALEANT PHARMA (VRX): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Investing , Business , Stocks

Referenced Stocks: ACT , AVNR , MYL , VRX

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

What to Wear to a Wedding
What to Wear to a Wedding           
4th of July Outfits
4th of July Outfits                 

Stocks

Referenced

Most Active by Volume

62,287,287
  • $17.03 ▼ 1.10%
26,194,993
  • $30.555 ▲ 1.24%
26,150,957
  • $126.44 ▼ 0.13%
25,197,634
  • $40.59 ▼ 6.26%
25,192,083
  • $19.07 ▲ 1.54%
24,563,617
  • $26.78 ▲ 0.45%
24,474,256
  • $5.85 ▲ 1.56%
24,111,132
  • $8.83 ▲ 2.08%
As of 7/2/2015, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com