PhRMA throws controversy-ridden Valeant under the bus

Valeant CEO J. Michael Pearson

Pharma industry trade group PhRMA generally protects its own amid controversy. But now, it's put up a statement on its website criticizing a drugmaker that's surrounded by plenty.

On Thursday, the group likened Canadian drugmaker Valeant Pharmaceuticals ($VRX) to much-maligned Turing Pharmaceuticals, noting that its strategy is "more reflective of a hedge fund than an innovative biopharmaceutical company."

Unlike Valeant, the innovators "have R&D at the core--and the numbers to prove it," the post says. The Quebec-based pharma, on the other hand, has made its way by serially acquiring companies and squeezing out costs, investing on average less than 3% of its total revenue on R&D.

It's the latest effort by the group to distance itself from the drug price uproar coming from lawmakers, presidential candidates and--in the case of Valeant--federal prosecutors. Earlier this week, short seller Citron Research likened Valeant to Enron and claimed it used its relationship with specialty pharmacies to inflate its top line; that relationship was one of the subjects of a pair of federal subpoenas the company announced last week that it had received.

Turing, which drew ire when it hiked the price of Daraprim last month by more than 5000%, felt a similar burn from the trade organization when PhRMA tweeted that the company didn't represent the values of its member companies.

Meanwhile, Valeant said on Monday that it's looking to sock more money into R&D. It'll also look to hive off its neurology and "other drugs" unit, which has been subject to some of its biggest price hikes, and it'll pursue fewer--if any--transactions "focused on mispriced products," CEO J. Michael Pearson said on a conference call.

But those assurances didn't do much to soothe investors' worries when Citron's "phantom sales" allegations hit. After plunging 19% Wednesday, Valeant's share price dropped another 7.4%, Bloomberg points out, with one BMO Capital Markets analyst downgrading the stock.

- read PhRMA's post
- see Bloomberg's take

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