Morningstar | Xifaxan Patent Settlement a Much-Needed Positive for Bausch; Raising Our Fair Value Estimate
We're raising our fair value estimate for no-moat Bausch Health to $20 per share following the company's announcement that it has settled with Teva (as part of the legacy Actavis generics business) to delay the generic launch of Xifaxan until 2028. While this doesn’t completely remove the overhang on Xifaxan, the delay pushes major competition much further back than our initial 2024 estimate. We estimate Xifaxan, which is Bausch's largest product, will reach nearly $1.2 billion in sales for this year, or about 14% of total sales and rising over time. The settlement today is for the 550 milligram dosage form that is critical for the drug's larger indications in hepatic encephalopathy and irritable bowel syndrome with diarrhea. Despite the positive news, we still think Bausch's high debt load and uncertain pipeline maintains a high level of risk for the business.We think this settlement helps Bausch's deleveraging goals while also offering greater flexibility to invest in the pipeline and next generation products. Although we expect financial leverage to remain uncomfortably high over the next several years, the longer window of expected cash flow from this high margin product should help ease longer-term debt service concerns. Additionally, the increased clarity on Bausch's Salix gastrointestinal business could lead to a higher sales multiple if management decided to sell the business. Rumors suggest a sale of the Salix business to Takeda fell apart in late 2016 over price.
Valeant Pharmaceuticals International is a pharmaceutical and medical device company that develops, manufactures, and markets a range of branded, generic and branded generic pharmaceuticals, over-the-counter (OTC) products, and medical devices (contact lenses, intraocular lenses, ophthalmic surgical equipment, and aesthetics devices). Co. has two operating and reportable segments: Developed Markets, which focuses in dermatology, neurology, gastrointestinal disorders, and eye health therapeutic; and Emerging Markets, which focuses primarily on branded generics, OTC products, and medical devices.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.