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Valeant cuts ties with "phantom" pharmacy Philidor Valeant cuts ties with "phantom" pharmacy Philidor
(about 2 hours later)
Drug maker Valeant announced it will cut ties with the speciality pharmacy it is accused of using to fake sales.Drug maker Valeant announced it will cut ties with the speciality pharmacy it is accused of using to fake sales.
The company's share price has dropped 32% in the two weeks following accusations of an inappropriate relationship the pharmacy Philidor.The company's share price has dropped 32% in the two weeks following accusations of an inappropriate relationship the pharmacy Philidor.
In a statement on Friday, Valeant said it would cut all ties with Philidor. Its shares fell another 7% after it said it would cut all ties with Philidor.
Valeant was accused by investor Citron Research of using Philidor to boost the price of medicine by falsifying sales of certain Valeant products. Valeant was accused by investor Citron Research of using Philidor to boost the price of medicine by falsifying sales.
"The newest allegations about activities at Philidor raise additional questions about the company's business practices." said chief executive Michael Pearson in a statement."The newest allegations about activities at Philidor raise additional questions about the company's business practices." said chief executive Michael Pearson in a statement.
"We know the allegations have also led them to question Valeant and our integrity," he added."We know the allegations have also led them to question Valeant and our integrity," he added.
In the statement also announced Philidor will end all its operations as "soon as possible".In the statement also announced Philidor will end all its operations as "soon as possible".
Philidor and Valeant insist they are two separate companies. But Valeant counted Philidor in its accounting and it owns a $100m option to buy the pharmacy.
In a conference call on Monday Mr Person sought to calm investors. He said the company would set up a committee to look into the relationship.
Mounting accusations
Citron Research, published an analysis on its website in October comparing Valeant's relationship with Philidor to Enron- which went bankrupt in 2001 after accounting fraud was exposed.
The review accused Valeant of using Philidor to falsely inflate sales allowing the drug maker to raise the price of certain medications.
"Citron believes the whole thing is a fraud to create invoices to deceive the auditors and book revenue," it wrote.
Valeant is also being investigated by US prosecutors for its drug pricing methods.
Shareholder support
Valeant's second biggest shareholder Bill Ackman- head of hedge fund Pershing Square- will host a conference call with his investors Friday afternoon to discuss the investment in Canadian drug maker.
It is widely believe he will give his support to the Valeant board having revealed earlier that he purchased an additional 2 million shares.