Full disclosure: Valeant is my largest short position.
99% of the time, shorting stocks is unemotional. Valeant is much, much different. This company is a CANCER on our society, and I don't say that lightly. It is a microcosm for why we have the most dysfunctional, expensive, and unsustainable healthcare system on the planet. They are leading the charge when it comes to figuring out ways to legally (but unethically) and illegally bilk the public for their own interest. I have studied the company for the past two years and it is absolutely rotten to the core. I hope all of senior management wind up in prison...unfortunately it might only be a couple when the dust settles.
I am going to sincerely enjoy this company going supernova, and I might get just as much pleasure watching it take down a bunch of lazy and ethically-challenged fund managers as well. Valeant is going to wreck many people's careers.
The ironic thing is that this is good for us in the long-run. This is exactly the kind of wake up call we need to fix our healthcare system.
> I am going to sincerely enjoy this company going supernova, and I might get just as much pleasure watching it take down a bunch of lazy and ethically-challenged fund managers as well. Valeant is going to wreck many people's careers.
Notably Ackman has a very large position. The Swiss National Bank also owns 1.3 million Valeant shares.
"Pearson’s next suggestion was even more daring: Cut research and development spending, the heart of most drug firms, to the bone. “We had a premise that most R&D didn’t give good return to shareholders,” says Pearson. Instead, the company should favour M&A over R&D, buying established treatments that made enough money to matter, but not enough to attract the interest of Big Pharma or generic drug makers"
TLDR:
Cut R&D, buy successful but smaller drugs and then because of no competition make a killing by jacking up prices.
This firm and its nasty business model of profiteering off the backs of sick desperate people, deserve to die. They are no better than vultures that feed on the dying.
I remain impressed as ever by the health insurance & pharmaceutical markets' ability to distribute financial rewards to sources of value creation.
Speaking of which, even though my libertarian days are long passed on account of forming a realistic picture of what does and does not constitute value creation in the eyes of the market, I never went to the trouble of studying "blackhat" business tactics intentionally. Perhaps I should. Any recommended reading?
I am coming late to the game but cannot find useful, clear explanations (I read the rather over wrought citron doc ... Is this a genuine stock researcher?)
So as I understand it :
- valeant sells over priced medical drugs, which are
named on a prescription by a doctor (?) but if you
Are with insurer X, the insurer requires the druggist
To replace expensive named brand with generic alternative.
- Valeant "owns"/has crushingly close relationship with Philidor a network of local pharmacies / druggists.
- philidor then buys a small druggist in Canada named R&O who then gets orders from all over the country and stops sending the cash to HQ because they were bought for 350k and now have revenue of 69m a few months later
- And ... Exactly how does Philidor do this fraud thing? If you are supposed to swap NameBrand out for GenericBrand, how does sending in 69M of invoices for NameBrand help? Philidor / valeant were not supposed to be selling it anyway? How does this coupon thing help?
This is one of the annoying things about fraud - it is all simple when you eventually understand it.
Ps if anyone cares to explain how one can make and obtain money from having "stolen identity" please post that too ...
This is my take (based on other articles I've read):
- Most of Valeant's drugs have cheap generic options, so most insurance company's say "no" when a pharmacy tries to fill it, hence it's hard as hell for Valeant to sell their drugs
- Valeant forms a cushy relationship with Philidor. Unlike most pharmacies, Philidor puts a LOT of effort into getting the insurance companies to say yes (they just give the drug to the patient before getting paid; if the drug gets denied, they try many others ways to get paid)
- Philidor was starting to get shutdown by payers, basically, any request from Philidor was red flagged by the payers to double check to see if something fishy was going on
- Philidor also tried to get a pharmacy license in California, but the authorities said no because they lied on who actually owned what (apparently getting a "no" to a license is really bad)
- Philidor then decides to buy R&O to get their licenses and their payer contracts. Basically it's a run around, the insurance company will see the script coming from R&O and basically think "ahh.. at least it's not Philidor"
- However, Philidor starts playing loose and fast with R&O license even before they closed the deal. Philidor would bill an insurance company using R&O's pharmacy ID, which is a HUGE no-no
- R&O sees what's up and says "screw this crap, I'm not going to give Valeant any of the insurance money I have until I get some goddamn answers as to what they are doing"
- Valeant (in all it's wisdom) sues R&O for non-payment and R&O says "I never got a invoice from you" and all hell breaks loose as the story unwinds
The real solution is that we need single payer healthcare that only covers generics. Then if people want to experiment with patent medicine, they can get supplemental insurance from the private markets or pay for it out of pocket. Until then the whole system is fucked.
Not sure where you're going with this. That would mean that no one would have access to any drug until it had already been on the market for at least 8 or more years, unless they were willing to pay it out of pocket (if they can't afford the insurance).
On Medicaid and have HER+ breast cancer? Tough, you can take some horrible chemotherapy that will give you 6 months, not the new HER2 drugs that will give you 5+ years of life.
I consider myself relatively libertarian, so I find myself nearly in shock that I believe a single payer system is the inevitable, and perhaps best, solution. (Although your generic vs branded thing makes no sense, no offense) Our problem is that we have made thing SO dysfunctional that a few laws here and there probably cant fix it - that's how broken it is. There would be drawbacks for sure, but we're at the point where things are so bad that the incremental drawbacks would be far outweighed by the benefits. It's pretty depressing to think about in all honesty.
There was a really interesting episode of the podcast called White Coat Black Art that generally covers the Canadian health care system. In the recent election a single payer pharamacare system was part of one of the platforms, so the podcast host went to Sweden to see how they do it.
This would be fine, so long as we made drugs go generic much faster. Which would require more public funding for drug research. Which would turn the system on its head.
I don't understand one thing. All the articles I read about Valeant and Phildor say that Phildor only represents 6% or revenue. Does that mean the other 94% is legitimate and comes from pharmacies where Valeant does not have an option to buy them? That is the piece I don't understand.
Only 6% percent of Valeant's revenue goes through Philidor. However, this raises HUGE questions about the legitimacy of the other 94% of Valeant's revenue streams. How many other arrangements like this does Valeant have. Is it conducting it's business on its other channels in an above board manner?
A huge portion of Valeants growth strategy comes from specialty pharmacies like Philidor. The integrity of the strategy has now been called into question by investors.
[+] [-] bedhead|10 years ago|reply
99% of the time, shorting stocks is unemotional. Valeant is much, much different. This company is a CANCER on our society, and I don't say that lightly. It is a microcosm for why we have the most dysfunctional, expensive, and unsustainable healthcare system on the planet. They are leading the charge when it comes to figuring out ways to legally (but unethically) and illegally bilk the public for their own interest. I have studied the company for the past two years and it is absolutely rotten to the core. I hope all of senior management wind up in prison...unfortunately it might only be a couple when the dust settles.
I am going to sincerely enjoy this company going supernova, and I might get just as much pleasure watching it take down a bunch of lazy and ethically-challenged fund managers as well. Valeant is going to wreck many people's careers.
The ironic thing is that this is good for us in the long-run. This is exactly the kind of wake up call we need to fix our healthcare system.
[+] [-] randomname2|10 years ago|reply
Notably Ackman has a very large position. The Swiss National Bank also owns 1.3 million Valeant shares.
The similarities to Enron are uncanny, as pointed out in the research report that started this all: http://www.citronresearch.com/wp-content/uploads/2015/10/Val...
[+] [-] lifeisstillgood|10 years ago|reply
[+] [-] seivan|10 years ago|reply
[+] [-] toomuchtodo|10 years ago|reply
[+] [-] danieltillett|10 years ago|reply
[+] [-] suprgeek|10 years ago|reply
It contained the all important paragraph:
"Pearson’s next suggestion was even more daring: Cut research and development spending, the heart of most drug firms, to the bone. “We had a premise that most R&D didn’t give good return to shareholders,” says Pearson. Instead, the company should favour M&A over R&D, buying established treatments that made enough money to matter, but not enough to attract the interest of Big Pharma or generic drug makers"
TLDR: Cut R&D, buy successful but smaller drugs and then because of no competition make a killing by jacking up prices.
This firm and its nasty business model of profiteering off the backs of sick desperate people, deserve to die. They are no better than vultures that feed on the dying.
[+] [-] jjoonathan|10 years ago|reply
Speaking of which, even though my libertarian days are long passed on account of forming a realistic picture of what does and does not constitute value creation in the eyes of the market, I never went to the trouble of studying "blackhat" business tactics intentionally. Perhaps I should. Any recommended reading?
[+] [-] randomname2|10 years ago|reply
[+] [-] lifeisstillgood|10 years ago|reply
So as I understand it :
- valeant sells over priced medical drugs, which are named on a prescription by a doctor (?) but if you Are with insurer X, the insurer requires the druggist To replace expensive named brand with generic alternative.
- Valeant "owns"/has crushingly close relationship with Philidor a network of local pharmacies / druggists.
- philidor then buys a small druggist in Canada named R&O who then gets orders from all over the country and stops sending the cash to HQ because they were bought for 350k and now have revenue of 69m a few months later
- And ... Exactly how does Philidor do this fraud thing? If you are supposed to swap NameBrand out for GenericBrand, how does sending in 69M of invoices for NameBrand help? Philidor / valeant were not supposed to be selling it anyway? How does this coupon thing help?
This is one of the annoying things about fraud - it is all simple when you eventually understand it.
Ps if anyone cares to explain how one can make and obtain money from having "stolen identity" please post that too ...
[+] [-] refurb|10 years ago|reply
- Most of Valeant's drugs have cheap generic options, so most insurance company's say "no" when a pharmacy tries to fill it, hence it's hard as hell for Valeant to sell their drugs
- Valeant forms a cushy relationship with Philidor. Unlike most pharmacies, Philidor puts a LOT of effort into getting the insurance companies to say yes (they just give the drug to the patient before getting paid; if the drug gets denied, they try many others ways to get paid)
- Philidor was starting to get shutdown by payers, basically, any request from Philidor was red flagged by the payers to double check to see if something fishy was going on
- Philidor also tried to get a pharmacy license in California, but the authorities said no because they lied on who actually owned what (apparently getting a "no" to a license is really bad)
- Philidor then decides to buy R&O to get their licenses and their payer contracts. Basically it's a run around, the insurance company will see the script coming from R&O and basically think "ahh.. at least it's not Philidor"
- However, Philidor starts playing loose and fast with R&O license even before they closed the deal. Philidor would bill an insurance company using R&O's pharmacy ID, which is a HUGE no-no
- R&O sees what's up and says "screw this crap, I'm not going to give Valeant any of the insurance money I have until I get some goddamn answers as to what they are doing"
- Valeant (in all it's wisdom) sues R&O for non-payment and R&O says "I never got a invoice from you" and all hell breaks loose as the story unwinds
[+] [-] Alex3917|10 years ago|reply
[+] [-] refurb|10 years ago|reply
On Medicaid and have HER+ breast cancer? Tough, you can take some horrible chemotherapy that will give you 6 months, not the new HER2 drugs that will give you 5+ years of life.
How would that even work?
[+] [-] bedhead|10 years ago|reply
[+] [-] kejaed|10 years ago|reply
http://www.cbc.ca/radio/whitecoat/blog/pharmacare-sweden-sty...
[+] [-] rjurney|10 years ago|reply
[+] [-] rjurney|10 years ago|reply
[+] [-] kenesom1|10 years ago|reply
"Philidor" ["Francois-Andre Philidor was an 18th century French Chess master"]
"BQ6 Media" ["named after the chess shorthand for Bobby Fisher's legendary move against Russian chess master Boris Spassky in 1972"]
"End Game LP" ["stage of a chess game when there are few pieces left"]
"KGA Fulfillment Services Inc." ["popular chess move is the King's Gambit Accepted, or as it's often referred to in chess notation, KGA."]
"Isolani LLC" ["Isolani refers to an isolated queen’s pawn."]
"Lucena Holding LLC" ["Lucena position - one of the most famous and important positions in chess endgame theory"]
"Back Rank" ["a checkmate move in which a rook or queen takes the king on the back row of the board."]
[1] http://sirf-online.org/2015/10/19/hidden-in-plain-sight-vale...
[2] http://www.theglobeandmail.com/report-on-business/valeants-s...
[3] http://www.propublica.org/article/pharmacies-valeant-affilia...
[4] http://sirf-online.org/2015/10/25/the-kings-gambit-accepted-...
[5] https://en.wikipedia.org/wiki/Chess_endgame
[6] https://en.wikipedia.org/wiki/Lucena_position
[+] [-] qj4714|10 years ago|reply
[+] [-] alexhu11|10 years ago|reply
A huge portion of Valeants growth strategy comes from specialty pharmacies like Philidor. The integrity of the strategy has now been called into question by investors.
[+] [-] TYPE_FASTER|10 years ago|reply