TORONTO – A class-action lawsuit has been launched against Valeant Pharmaceuticals, alleging shareholders suffered losses after the Quebec-based company misrepresented or failed to disclose its relationship with U.S. mail-order pharmacy Philidor Rx Services.
The notice of motion alleges that Valeant negotiated and purchased an option to buy Philidor in January 2013 and ultimately consolidated the pharmacy’s financials with their own, but didn’t disclose that relationship until around Oct. 19.
The lawsuit alleges that shares of Valeant “dropped considerably” in price after the company disclosed its contractual relationship with the pharmacy, resulting in losses for class members.
The price of Valeant (TSX:VRX) shares has fallen about 70 per cent since August following scrutiny about its business practices.
The allegations have not been proven in court.
Representatives for Valeant said they were working on formulating a response.
If certified, the proposed lawsuit launched by Toronto-based Koskie Minsky LLP and filed in Ontario Superior Court in Toronto would cover all shareholders who purchased Valeant’s shares between Jan. 1, 2013, and this past Monday.
Joyce Kowalyshyn, a resident of Vancouver, B.C., is serving as the representative of the class.
Garth Myers, a lawyer at the firm, said a number of other people who also bought shares during the class period have contacted the firm.
Valeant recently severed ties with Philidor, which is expected to close.