It would seem obvious that Valeant Pharmaceuticals (VRX) CEO Joseph Papa would prefer to see anyone seated in the Oval Office next January other than one of his firm's most vociferous critics, Hillary Clinton.
After all, Clinton has said in a video earlier this year that she's "going after" the struggling Canadian drugmaker for "predatory pricing" on several of its acquired drugs -- a Valeant practice that's stirred controversy and contributed to shares falling about 74% this year alone.
But a Trump presidency would be no walk in the park for the debt-laden drugmaker either -- especially given Valeant's heavy reliance on Medicare payouts and disproportionate U.S. footprint.
"Regulating the price of pharmaceuticals and eliminating price gouging might be the only issue that Trump and Hillary both agree on," Andrew Left, the short-seller who was instrumental in exposing accounting improprieties at Valeant last fall, said in a Monday phone interview with Real Money. Left is the head of Citron Research, which labeled Valeant a "pharmaceutical Enron" last fall based on accounting improprieties tied to Valeant's former partnership with mail-order pharmacy Philidor.
Valeant shares were skidding more than 5% in midday trading ahead of Monday's debate between the two candidates (the first of three this season). Pharma investors are bracing for a showdown that could dedicate substantial time to the widespread price-hiking among Big Pharma giants, most recently kindled by Mylan (MYL) in the exorbitant price increases on its life-saving EpiPen allergy treatment.
"What we see with Mylan post-Valeant, is that this is not going away fast," Left added. "I think that people understand the fact that this is not over."
TD Securities analysts appear to agree, releasing estimates Monday that Valeant is disproportionately reliant on Medicare payments and the U.S. pharmaceutical industry vs. many of its peers. TD Securities estimates that 63% of Valeant's sales come domestically and that 20% are tied to Medicare, a government program both presidential candidates have blasted for stifling competition.
About 2% of Valeant's sales are also likely to disappear if programs such as Clinton's "Drug Pricing Reform Proposal" are affected, TD Securities analysts Lennox Gibbs estimates, noting that both candidates are in favor of "price watchdog committees" that could further encumber Valeant's pricing power in the U.S.
Shares of Valeant and industry peers such as Mallinckrodt (MNK) and Teva Pharmaceuticals (TEVA) , which were down about 5% and 2%, respectively, ahead of the debates, were also pressured Monday by reports that Mylan may be booking pretax profits tied to its EpiPen that are about 60% of what was presented to a recent congressional panel centered on EpiPen price hikes.
