Valeant Pharmaceuticals Intl Inc (VRX): This Company is Set for Newer Heights in the Eye-Care Sector

Increased competition and a decline in launch opportunities has created short-term hurdles for Teva, but its long-term prospects look promising. H Lundbeck and Teva will only be slightly affected by the acquisition because the deal relates to eye care. Novartis AG (ADR) (NYSE:NVS) is the main player in the eye care sector and will feel increased competition.  Novartis is a giant around the world with $58 billion in annual sales. It is surprising that they didn’t bid for Bausch + Lomb, as there would have been many synergies. Novartis AG (ADR) (NYSE:NVS) has over $6 billion in cash, so they certainly could afford it.  However, Novartis AG (ADR) (NYSE:NVS) has been growing earnings on their own and the market is liking it.  The stock price is up 38% in the 52 weeks.

Conclusion

Valeant will now be a global leader in an eye care market that is set to expand under great demand from emerging markets, an aging population, and increased incidence of diabetes. The deal will add to the earnings-per-share (EPS) of Valeant, save $800 million in annual costs until the end of 2014, and add to its product geographical range.

Over 50 acquisitions since 2008 have expanded Valeant’s patent exposure and refocused it on attractive pharmaceutical markets. All this will have beneficial effects on Valeant Pharmaceuticals Intl Inc (NYSE:VRX)’s stock price, and new equity worth $1.5 to $2 billion will be issued. Purchase of new stock is likely to be profitable for investors at this point.

The article This Company is Set for Newer Heights in the Eye-Care Sector originally appeared on Fool.com and is written by Mike Thiessen.

Mike Thiessen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Mike is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.