The Salix–Valeant merger: Basics of Valeant

Brent Nyitray, CFA, MBA

Valeant makes yet another acquisition: Salix Pharmaceuticals (Part 5 of 12)

(Continued from Part 4)

Basics of Valeant

Valeant Pharmaceuticals International (VRX) is a multinational, specialty pharmaceutical and medical device company that develops, manufactures, and markets a broad range products, including:

  • branded pharmaceuticals

  • generic and branded generic pharmaceuticals

  • over-the-counter (or OTC) products

  • medical devices: contact lenses, intraocular lenses, ophthalmic surgical equipment, and aesthetics devices

These products are marketed directly or indirectly in more than 100 countries. They are organized into developed markets and emerging markets lines of business.

Developed Markets segment

The Developed Markets segment accounted for roughly 74% of Valeant’s revenues last year. These products include:

  • An acne franchise, including Solodyn, Ziana, Acanya, and Atralin

  • Wellbutrin XL: indicated for the treatment of major depressive disorder in adults

  • Xenazine: indicated for the treatment of chorea

  • Zovirax: topical antivirals that are active against herpes viruses

  • Arestin: subgingival sustained-release antibiotic

  • PreserVision: antioxidant eye vitamin and mineral supplement

  • CeraVe: skin moisturizers

  • Several products from the Bausch + Lomb transaction, including lenses, solutions, and drugs to treat ocular diseases

Emerging Markets segment

The Emerging Markets segment accounted for 26% of revenues last year. These products include:

  • AntiGrippin for symptomatic treatment of acute respiratory diseases, acute respiratory viral diseases, and influenza

  • Various Bausch + Lomb products for contact lenses and solutions

  • Medical device systems for aesthetic applications, including dermatological solutions and liposuction

The Salix–Valeant merger will add GI products to Valeant’s pharma franchise. Salix Pharmaceutical’s (SLXP) biggest drug is Xifaxan.

Other merger arbitrage resources

Other important merger spreads include the deal between Hospira (HSP) and Pfizer (PFE). For a primer on risk arbitrage investing, read Merger arbitrage must-knows: A key guide for investors.

Investors who are interested in trading in the healthcare sector should look at the Health Care Select Sector SPDR Fund (XLV).

Continue to Part 6

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