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| | October 26, 2015 | |
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| | Valeant Pharmaceuticals will attempt to defend itself in a phone call with investors this morning at 8 a.m.
We'll be interested to hear what they have to say. The company's stock has been cratering since Citron Research published a report last week saying Valeant uses its relationship with specialty pharmaceutical companies, including a firm called Philidor, to inflate revenue artificially. Citron calls it a "pharmaceutical Enron." The Wall Street Journal has more on the story this morning.
But whatever happens this morning, we already know this: Valeant is one of the worst things to happen to the pharmaceutical business in a long time. The company has routinely bought up drug companies, jacked up prices by obscene amounts, and cut research and development. That may have been a good thing (temporarily) for shareholders. But it has undercut the rationale for the U.S. policy of prohibiting the government from negotiating drug prices. Such price controls would be a bad thing, the argument goes, because they would lead to less research and innovation. Valeant puts a lie to the argument.
Valeant already can take credit for further undermining public trust in business, and increasing pressure for heavy handed government solutions to our health care mess.
More news below.
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| | Top News | |
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| | • Nasdaq may set record this week The Nasdaq 100 index, dominated by the U.S. technology industry, could set a record this week if all goes well with Apple - which is due to release results on Tuesday. Last week, better-than-expected results from Alphabet (Google's parent), Amazon and Microsoft boosted tech shares and steered the U.S. market's recovery from its worst correction in four years. Apple is expected to report a 21% jump in revenue and observers say the bar has been raised for the company's earnings report. Reuters • U.S. firms warn of slowing economy While the tech industry continues to hum along nicely, another trend this earnings season is that railroads, manufacturers and energy producer businesses are all saying that they are facing a slowdown in production, sales and employment that will spill into next year. Some, like Caterpillar and 3M, are already experiencing a downturn. The poor earnings and muted growth projections for 2016 comes as the Federal Reserve mulls an increase to interest rates for the first time in nine years. WSJ (subscription required) • UAW, GM reach agreement The United Auto Workers union and General Motors have reached a tentative pact that averted a strike that could have occurred minutes before the deadline. Few details were released though both sides touted the deal. Local union leaders will meet in Detroit on Wednesday to discuss and vote on the agreement - which likely largely mirrors the one ratified by Fiat Automobiles in terms of wages. Detroit Free Press | |
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| | Around the Water Cooler | |
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| | • The women who saved Best Buy On the eve of Best Buy's 50th anniversary, the largest consumer-electronics retailer in the world has something to celebrate: it seems back on track thanks to redesigned stores, retrained staff and earnings that have beaten Wall Street's expectations for 11 quarters in a row. Best Buy's leadership team is largely female, including Chief Financial Officer Sharon McCollam - an executive lured out of retirement to help implement an enduring turnaround. Fortune • Walgreens halts Theranos expansion Walgreens says it won't open any additional Theranos blood-testing centers in the company's pharmacies until it gets answers to questions surrounding the start-up's technology. The move comes after Theranos found itself the target of lengthy Wall Street Journal stories that questioned the effectiveness of the technology that claims to require only a few drops of blood for testing. In 2013, Walgreen announced a pan to bring Theranos technology to all of the company's 8,000 locations, though a timeframe wasn't given for that goal. Fortune • Facebook's tough sell in India Facebook is in the process of trying to bring the Internet to the four billion people who lack it, a project called Internet.org that isn't exactly a roaring success yet. The goal is to initially show users what the Internet can be used for with basic free services, but in India there are complaints that the project is a way to get people to use Facebook and sign up for paid plans from the social media giant's cellphone carrier partner Reliance Communications. CEO Mark Zuckerberg has made several overtures to win over the Indian public, including a visit to New Delhi this week to take questions from Facebook's Indian users. New York Times (subscription required) | |
| | 5 things to know this week | |
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| | Apple's earnings, baseball, and a Fed meeting — 5 things to know this week. Today's story can be found here. | |
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