Valeant grows Salix sales team as deal rumors swirl
- Valeant Pharmaceuticals is growing its sales force, turning the focus on primary care prescribers of the antibiotic Xifaxan (rifaximin) for irritable bowel syndrome with diarrhea (IBS-D) and Relistor (methylnaltrexone bromide) for opioid-induced constipation (OIC). The "significant sales force expansion" will occur over "the coming weeks," the company said.
- Xifaxan and Relistor are key pieces of the Valeant's gastrointestinal franchise and both drugs were brought into the fold through Valeant's $11 billion acquisition of Salix Pharmaceuticals in 2015.
- Despite being two of the company's best-selling drugs, the company confirmed in early November that its shopping around the Salix unit in hopes of bringing in some much-needed cash. Sales of Xifaxan and other Salix drugs annualize to around $1.4 billion in revenue, according to a note from Evercore ISI analyst Umer Raffat.
"Xifaxan and Relistor are integral to our gastrointestinal franchise which remains a core asset for future growth potential in the hands of Valeant," said CEO Joe Papa in a statement.
The sales force expansion could indicate that talks to sell Salix aren't going in the direction that Valeant had hoped. The Wall Street Journal speculated that Japan's Takeda Pharmaceuticals was the likely buyer for the unit and more recent reports suggest those unsubstantiated talks had broken down.
This plays as both a positive and negative for Valeant. In the negative column, the company has $31 billion in debt that it needs to pay down and very few obvious "non-core assets" that it could sell off that would make a dent in this. Yet, investors and analysts balked at the idea of Valeant selling Salix and off-loading two of its best-selling products. If Valeant can grow these drugs on its own, it just might help itself. Both markets are strong and growing.
The market for drugs for irritable bowel syndrome with diarrhea was worth around $289.3 million in 2015 according to Credence Research, and could grow to $1.1 million by 2022, at a CAGR of 13.89%. This has been driven at least in part, by the U.S. approval of Valeant's Xifaxan (rifaximin) and Allergan's Viberzi (eluxadoline).
Meanwhile, the opioid-induced constipation market is expected to grow to be a much bigger one by 2022, with Credence Research estimating it could be worth $2.8 billion.
Salix is again expected to be a market value driver, with the recent launch of Relistor, its oral formulation of methylnaltrexone bromide. Relistor is a peripherally acting mu-opioid receptor antagonist (PAMORA), and was approved in the U.S. in July 2016.
This follows a complicated year for Valeant where ex-employees have been charged with fraud, the company has been accused of racketeering and price gouging, and its manufacturing sites have been investigated for GMP violations.
- Valeant Pharmaceuticals Statement
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