3 Worst Performing Pharma Stocks for 2016
December 27, 2016
By Alex Keown, BioSpace.com Breaking News Staff
NEW YORK – It’s no secret that 2016 has not been kind to biotech stocks. Year-to-date, the iShares Nasdaq Biotechnology ETF (IBB) is down nearly 20 percent. So, as investors look to better their odds for 2017, here’s a look at three of the worst-performing biotech stocks as selected by U.S. News & World Report.
1. Valeant
For more than a year Laval, Quebec-based Valeant has been beaten down by bad news, government inquiries into its pricing tactics and management issues. Shares of Valeant are currently trading at $14.33, down from $102.40 per share at the start of January. That means shares of Valeant are down by more than 80 percent for 2016. The year started with Democratic presidential candidate Hillary Clinton slamming the company for its pricing practices and has ended the year with one of its biggest investors, Bill Ackman, selling off about 3.5 million shares. Ackman and his investment firm Pershing Capital Management, have lost more than $2 billion on its investment in Valeant over the past year. Valeant has seen its stock drop dramatically since 2015 after questions about possible accounting fraud related to the Valeant’s ties to the now shuttered specialty pharmacy company, Philidor Rx Services. Valeant has been under investigation by the U.S. attorney’s office in New York since last year following news of the Philidor accounting practices became known. In November, two former Valeant executives, Michael Pearson and Howard Schiller, were under investigation for their possible roles in the Philidor scandal.
2. Allergan
Shares of Allergan are trading this morning at $200.59. However, the stock price has lost more than one-third of its total value since the close of 2015, when shares were trading at $315.06. One culprit for Allergan’s decline in stock price, seems to be the failed merger with Pfizer . The deal was going through to create one of the largest pharma companies in the world, until the U.S. Treasury Department stepped in and created new regulations to prevent tax inversion practices. Despite that failure, Allergan went on a string of acquisitions to bolster its therapeutic pipeline. Brent Saunders, Allergan’s chief executive officer, said the deals the company has focused on since the Pfizer deal fell apart, are for products that Allergan believes it can grow and develop into strong revenue generators.
3. Mylan
Since the company faced a backlash of public anger over the $600 price of its EpiPen Auto-Injector in the late summer, shares of Mylan Inc. have seen a dip in stock prices. The two-pack EpiPen retailed for about $600. However, when the company acquired the EpiPen in 2007, it was available for about $57. The EpiPen generated more than $1.2 billion in revenue for 2015, accounting for about 40 percent of Mylan’s overall earnings. The price increase of the EpiPen was enough to warrant U.S. lawmakers to look at the pricing, particularly since so many school systems buy the injectors as preventative treatments. Earlier this month, lawmakers were again angered by Mylan after Chief Executive Officer Heather Bresch chose not to testify before a Congressional panel. The panel wanted to review the $465 million settlement Mylan agreed to pay the U.S. Department of Justice over allegations it overcharged Medicaid for the EpiPen.