Valeant: The Pharmaceutical Enron?
Andrew Left / Citron Research · 2015
"Citron's claim: Valeant used a specialty pharmacy, Philidor, to book sales in an Enron-style scheme."
In 2015, Citron Research published a report comparing Valeant Pharmaceuticals to Enron, and the stock collapsed. The report focused on Valeant's undisclosed ties to Philidor, a specialty pharmacy that steered prescriptions toward Valeant's expensive branded drugs. Valeant cut ties with Philidor within weeks; in 2020 it paid $45 million to settle SEC charges over misleading disclosures about the arrangement.
Valeant's strategy involved cutting R&D, buying older drugs and raising their prices sharply. Philidor, which Valeant had an option to acquire but did not disclose to investors, dispensed those drugs and handled insurance claims. Press reports at the time described Philidor staff changing how prescriptions were coded so that branded drugs were dispensed instead of cheaper generics. A former Valeant executive and Philidor's CEO were later convicted in a kickback scheme that defrauded Valeant itself — a reminder that the full story was messier than the short report.
What was the role of the specialty pharmacy Philidor in the Valeant controversy?
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- Coverage of Citron's Valeant "pharmaceutical Enron" callFortune
Enron Short Thesis
"Enron's returns didn't cover its cost of capital and its accounting was opaque; the equity was worthless."