Jeff Elliott's blog
The past month has been volatile for the health care sector in general, and for Valeant Pharmaceuticals specifically, with the stock down over 50% from the peak in August and approximately 20% year to date. While some of the issues impacting Valeant are relevant to the entire sector (pricing and U.S. government headline risk), many of the drivers of the stock’s decline are specific to Valeant and, we would argue, self-inflicted.
I recently attended the American Academy of Neurology (AAN) annual meeting in Washington, where advances in the development of drugs for debilitating diseases such as Alzheimer’s disease (AD) and Multiple Sclerosis (MS) were presented. Although still in the early- to middle-innings of development, there are encouraging signs of hope from a number of companies. These could ultimately represent huge steps forward in the management of some very difficult-to-treat diseases. I came away incrementally positive on AD drugs from Biogen Idec and Roche’s new MS treatment.
With the recently announced acquisitions of Nordion by U.S.-based Sterigenics, Patheon by private equity firm JLL Partners and Paladin by Endo Pharmaceuticals, the unwinding of the Canadian health care industry, which began in earnest in the second half of the 2000s, seems to have largely come to its conclusion. This once promising growth sector has not found a way to revive itself, and Canadian investors find themselves with few domestic choices when looking for exposure to an important and fundamentally attractive industry.