The healthcare sector has always been a subject of great interest to investors and analysts alike. With the rise of sedentary lifestyles and increasing stress levels across demographics, the healthcare sector has a huge market to cater to.
Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is a fast growing company in dermatology, ophthalmology and neurology. Over the years, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) has developed a disparate product portfolio comprising of prescription drugs, branded generics and Over The Counter (OTC) drugs.
While 65 % of its total revenue is driven by prescription brands; branded generics and OTC products account for 35% of the total revenue. Valeant Pharmaceuticals Intl Inc (NYSE:VRX) has presence across the globe, as it operates in the US, Canada, Central and Eastern Europe, Latin America, South East Asia and South Africa.
The year 2012, saw the company generate revenue from product sales of $3.31 billion, up 47% compared to $2.26 billion during 2011, despite suffering a loss of $161 million in revenues, owing to generic competition. The company delivered cash Earnings Per Share (EPS) of $4.51 during the financial year 2012, which is a growth of 54% compared to previous year. The net cash flow from operating activities in 2012 was $656.6 million, posting a 3% year-over-year growth.
The financial results for the first quarter of 2013 were nothing less than impressive with Valeant Pharmaceuticals Intl Inc (NYSE:VRX) posting revenues of $ 1.03 billion from product sales, which is a 38% year-over-year growth, while delivering a cash EPS of $ 1.30, up by a staggering 41%.
GROWTH-Organic and Inorganic
Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is a specialty pharma company catering to a niche segment, predominantly dermatology and neurology. The company’s growth strategy involves harnessing growth opportunities by seeking strategic alliances coupled with developing newer therapeutic platforms aimed at boosting its organic growth.
The company’s past acquisitions of Medicis Pharmaceutical Corporation, Dermik, Obagi Medical Products, and its merger with Biovail Corporation during 2010, have successfully resulted in it becoming a front-runner in the dermatology industry.
Keeping up with its tradition, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is currently in the news for its decision to acquire Bosch and Lomb for $ 8.7 billion. The deal would give a huge impetus to Valeant Pharmaceuticals Intl Inc (NYSE:VRX)’s ophthalmology business, while securing access to China and other high growth emerging markets.
Closely analyzing the key revenue drivers of Valeant Pharmaceuticals, the company’s major operational areas are the Ophthalmology, Dermatology and Neurology segments.
Driven by a surge in eye disease cases and an ageing population, the global ophthalmology market is estimated to touch a staggering $ 18 billion by 2018, growing at a Compound Annual Growth Rate (CAGR) of 5.1% from 2011 to 2018. The rise in related diseases causing eye dysfunctions such as diabetes and other hormonal disorders is another major contributor to the advancement of this industry.
Geographically, although the US is estimated to uphold its position as the market leader in the ophthalmology space holding 32.8% of the global ophthalmology devices market share in terms of revenue, emerging markets such as Brazil, China, Mexico and India are also estimated to expand at a double digit growth rate.
Considering Valeant’s major business operations are in emerging markets, the industry scenario looks favorable for years to come.
In view of the above, Valeant’s intended takeover of Bosch and Lomb would substantially strengthen its competitive position in terms of the profitability of its ophthalmology business.
Dermatology and Neurology
Another key business segment for Valeant’s is the dermatology division. Valeant has succeeded in establishing itself as a major player in the dermatology space by its carefully planned strategic alliances mentioned above.