Valeant (VRX) is an unusual biopharma company because it acquires aggressively and and at times inhabits the home of its "host."
Puns aside, the company has outgrown its current location acquired from BioVail. Valeant lacked the space for new dermatology R&D research. It also lacked space for all of the personnel it utilizes for an increasing number of acquisitions. Moving to a new location can sometimes provide a company the additional space and surroundings needed to expand and grow new product lines.
For Valeant, making the move to a small town called Laval, located in Montreal, Quebec will unequivocally help the company expand its presence in the dermatology market. The company's new headquarters features a large research and development complex for the design and creation of new dermatology products. In 2009, the company acquired a cosmeceutical company with large research facilities named Laboratoire Dr Renaud for C$23 million ($23 million). Moving to this R&D complex should provide the space researchers and drug development teams need to create new treatments and enhance existing ones already on the market. The company is headquartered in Mississauga, Ontario for now, which is the cramped but temporary home it adopted after it merged with BioVail. Given Valeant's merger frenzy, the company badly needs improved and larger facilities, which it will get with its move to the new state-of-the-art complex where it can place its new dermatology facility.
Growing steadily over the years due, in part, to acquiring smaller pharmaceutical companies in the U.S., Canada, Australia and Brazil, Valeant continues to develop and market effective anti-acne, skin cancer and scar treatment drugs. In 2008, the company acquired Coria Laboratories, DermaTech, and Dow Pharmaceutical Sciences. These acquisitions gave the company access to 23 prescription and OTC (over-the-counter) skin care treatments as well as increased exposure in countries including Australia and Brazil.
In 2010, the company acquired two companies in Brazil. Through these acquisitions, the company was able to establish a strong presence within the country which continues to demonstrate a growing need for dermatological products. The company also acquired a large manufacturing facility which has helped increase the number of units produced each year.
Valeant continues to expand its reach in U.S. and other markets around the world with partnerships and alliances with retailers like Wal-mart. It is through these alliances that Valeant provides skin care treatments for acne, psoriasis, skin cancer, sunburn, insect bites and other skin ailments. In addition to manufacturing dermatology products, the company also develops and manufactures drug treatments such as Wellbutrin XL, for the treatment of depression, Nitoman (tetrabenazine), used to treat hyperkinetic movement disorders, Xyrem, used to treat central nervous system conditions and Cesamet, used to help reduce chemotherapy-induced nausea.
Vitamins, skin and hair care products, pain relief products and topic skin creams round out the company's expansive product portfolio. The company also has a number of products in its pipeline still in development. These products range from fungal to Parkinson's disease treatments. Moving a larger facility to house its corporate offices and expand R&D capabilities became a necessity for the company.
From an investment standpoint, Valeant provides a little more safety and security than other pharmaceutical companies of similar size because of its diverse portfolio. With a goal of further expansion, the company continues to purchase smaller companies to create its brand in various regions around the world. This means more sales and increased customer loyalty. With a strong portfolio of brand name and generic drugs, Valeant continues to hold strong on the stock market.
For investors looking for solid stock to mix with riskier stock, Valeant is a good stock to choose. Its true value comes from its diverse product portfolio. The security the stock brings to an investment portfolio is worth the risk. And with a variety of new products in its pipeline, along with the acquisition of more companies in the future, investors will not have to spend as much time monitoring this company. Instead, investors can focus on building a portfolio around the company by spending time researching and choosing less or more risky stock. This should bring some comfort to those investing in the biotech and pharmaceuticals market.
Teva (TEVA), one of the largest generic drug manufacturers in the world currently trades for around $45.00 per share. The biggest problem Teva faces right now, however, is the release of its new generic drug, based on the drug Provogil, and subsequent lawsuit by Mylan (MYL).
Provogil, used to help those with sleep disorders including narcolepsy and sleep apnea, was developed by Cephalon, Inc. After Teva acquired Cephalon in the fall of 2011, the company released its generic version of the drug at the end of March under the Cephalon name. In order for the acquisition of Cephalon to become final, the Federal Trade Commission required Teva to sell the U.S. rights to Provogil, which it did to Par Pharmaceutical (PRX). Par developed its own generic version of the drug and is currently selling it. Teva was allowed to retain its rights to the generic form of the drug, however. The FDA also ruled that Teva could proceed with its patent application and would have 180 days of market exclusivity to its version of the drug.
According to the lawsuit filed by Mylan against the FDA, Teva did not have exclusivity rights to the drug, even after acquiring Cephalon and therefore, should not be granted any exclusivity rights. Mylan has also created a generic version of Provogil and wants exclusivity rights of its own.
Investors need to remain wary about investing in any company entangled in a lawsuit, especially one concerning exclusivity and patent rights as a poor outcome could cause stocks to decline - and quickly. Before investing in Teva, monitor how the lawsuit progresses to determine the winners and losers before investing. While generic forms of Provogil may sell well in the marketplace, investing in a company that suddenly loses its rights to manufacture and sell the product may spell disaster for those invested in the company.
This is another reason why Valeant is a solid company to invest in. Since it has a diverse portfolio, lawsuits and other legal matters will not have as big an impact on stock price as compared to smaller companies with less diverse portfolios.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.