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Valeant Pharma To Take Earnings Hit On Mylan's Zovirax Generic Launch

Canadian drug maker Valeant Pharmaceuticals International, Inc. (VRX,VRX.TO) announced Thursday that it will be launching an 'authorized generic' of genital herpes drug Zovirax ointment later in the day. The move comes a day after Mylan, Inc. (MYL) received final approval to launch Acyclovir Ointment USP, 5%, a generic version of Zovirax ointment.

"Yesterday, Mylan announced they had received approval of a generic Zovirax® ointment. While the timing of a generic approval was always uncertain, this was not unforeseen and we were prepared for its eventuality. In response to the new generic approval, we will be launching an authorized generic of Zovirax® ointment today," Valeant Chairman and CEO Michael Pearson said in a statement.

Meanwhile, the Mississauga, Ontario-based specialty pharmaceutical company said the Acyclovir launch is expected to negatively impact its fiscal 2013 cash earnings by about $0.30 to $0.40 per share. Valeant added it did not include the 'isolated event' in its original budget expectations.

However, the company noted it will likely mitigate the impact of the generic introduction with the positive effect of several product acquisitions, the repricing of term-loan debt and other events that have occurred since it provided financial guidance in January.

Valeant had revealed in January that it expected to post cash earnings in a range of $5.45 to $5.75 per share for fiscal 2013.

"We continue to expect once again to deliver outstanding performance in 2013 and we will provide an update to our 2013 guidance on our first quarter financial results conference call in May," Pearson added.

Zovirax Ointment is indicated as a treatment for initial genital herpes and in limited non-life-threatening mucocutaneous herpes simplex virus infections in immunocompromised patients. Mylan's Acyclovir is the first generic version of Valeant's Zovirax Ointment.

According to IMS Health, Acyclovir Ointment USP, 5% had U.S. sales of about $230 million for the 12 months ended December 31, 2012. Mylan will start shipping Acyclovir Ointment immediately.

In Thursday's regular trading session, VRX is currently trading at $71.64, down $0.63 or 0.32% on a volume of 1.17 million shares. In the past 52-week period, the stock has been trading in a broad range of $42.47 to $76.56.

VRX.TO is currently trading on the TSX at $72.37, down $0.54 or 0.74% on a volume of 0.17 million shares.

by RTT Staff Writer

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