Valeant Pharmaceuticals International, Inc. VRX recently announced that its wholly owned subsidiary, Salix Pharmaceuticals, Inc. has received FDA approval for Xifaxan 550 mg for the treatment of irritable bowel syndrome (IBS-D) in adults.

The approval was based on encouraging results from three phase III studies – TARGET 1, TARGET 2 and TARGET 3, wherein Xifaxan 550 mg showed efficacy and safety in repeat therapy following the completion of a two-week course of treatment.

As per an article published in The New England Journal of Medicine, approximately 35 million adults in America may suffer from IBS, and 40% IBS patients suffer from diarrhea-like symptoms that include urgency, loose, watery stool and abdominal pain.

Hence, the approval of Xifaxan 550 mg will provide patients access to a treatment that may provide relief from these symptoms. We note that Xifaxan 550 mg is already approved in the U.S. to manage hepatic encephalopathy. Given the immense market opportunity, a label expansion of the drug will further boost Xifaxan’s sales.

We remind investors that Valeant acquired erstwhile Salix Pharmaceuticals in Apr 2015 in a bid to enter the lucrative gastrointestinal (GI) market. Salix was a leader in the GI market armed with a wide variety of drugs such as Xifaxan 550, Uceris (for controlling mild or moderate ulcerative colitis), Relistor (for opioid-induced constipation) and Apriso (for ulcerative colitis).

Meanwhile, Actavis plc ACT received FDA approval for Viberzi as a twice-daily, oral treatment for adults suffering from IBS-D.

Valeant currently carries a Zacks Rank #1(Strong Buy). Other favorably placed stocks in the health care sector include Actelion Ltd. ALIOF and Gilead Sciences Inc. GILD. Both carry the same rank as Valeant.

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