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October 21, Valeant Pharmaceuticals stock plunged Wednesday after Citron Research compared the Canadian pharmaceutical company to the collapsed energy giant Enron and accused it of creating a network of phantom pharmacies to fool auditors. Valeant Chairman and CEO Michael Pearson had told analysts on Monday that his company works with Philidor and, late last year, Valeant had purchased an option to buy that company. Citron said in its report that it appears that Valeant and Philidor have created an entire network of clones to Philidor to avoid auditor scrutiny. Citron said that it 'believes the whole thing is a fraud to create invoices to deceive the auditors and book revenue. Citron is a short seller's research firm that publishes reports online about companies. Short sellers earn money when a stock declines. Citron says on its website that it does not guarantee that it is providing all available information, and its principals 'most always' hold a position in securities profiled on its site. Valeant also posted an explanation on its website of how it deals with sales and inventory tied to Philidor Rx Services. Those sales are treated as intercompany and are eliminated from the consolidated revenue Valeant reports. The Citron report comes as Valeant faces increasing scrutiny over the prices it charges for drugs. Valeant's business model has historically involved acquiring drugs that it considers undervalued, or mispriced, and then raising the price to what it determines is a proper value. The Laval, Quebec, company drew Congress' interest following its purchase of the life-saving heart drugs Nitropress and Isuprel. The company jacked up prices on both drugs shortly after buying them from Marathon Pharmaceuticals in February, tripling one and raising the other sixfold. Valeant revealed last week that federal prosecutors have subpoenaed documents tied to its drug pricing and other policies. The stock had tumbled about 40 percent Wednesday before recovering some of its value after Valeant responded to the Citron report. All rights reserved. Use this form if you have come across a typo, inaccuracy or would like to send an edit request for the content on this page. For general inquiries, please use our contact form. For general feedback, use the public comments section below please adhere to guidelines. Your feedback is important to us. However, we do not guarantee individual replies due to the high volume of messages. Your email address is used only to let the recipient know who sent the email. Neither your address nor the recipient's address will be used for any other purpose. The information you enter will appear in your e-mail message and is not retained by Medical Xpress in any form. You can unsubscribe at any time and we'll never share your details to third parties. More information Privacy policy. We keep our content available to everyone. Consider supporting Science X's mission by getting a premium account. Share 4 Share Email. Home Other. This document is subject to copyright. Apart from any fair dealing for the purpose of private study or research, no part may be reproduced without the written permission. The content is provided for information purposes only. Explore further. Systemic inflammation may play a role in how air pollution contributes to cognitive impairment 3 hours ago. Related Stories. Valeant mulls sale of business tied to drug price hikes Oct 19, Oct 15, Jun 23, Valeant will buy eye surgery device maker Synergetics Sep 2, Sep 1, Oct 19, Recommended for you. Sep 12, Aug 5, Taking a leave of absence can harm medical students' match prospects, finds study Apr 16, Mar 12, Feb 22, Load comments 0. Let us know if there is a problem with our content. Your message to the editors. Your email only if you want to be contacted back. Send Feedback. Thank you for taking time to provide your feedback to the editors. E-mail the story Valeant shares tumble as report questions company finances. Your friend's email. Your email. I would like to subscribe to Science X Newsletter. Learn more. Your name. Note Your email address is used only to let the recipient know who sent the email. Your message. Donate and enjoy an ad-free experience We keep our content available to everyone. Remove ads. Maybe later. E-mail newsletter. It appears that you are currently using Ad Blocking software. What are the consequences?

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