Trouble ahead for healthcare company Bausch Health (NYSE:BHC) (TSE:BHC), as a rival is about to interject itself into the bowel disease space. A lawsuit was filed only recently that may see Bausch Health’s Xifaxan treatment come under fire from a generic alternative. The measure was enough to cause Bausch Health double-digit losses in Tuesday afternoon’s trading.
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Not long ago, Norwich Pharma—a generic drugmaker—filed suit related to a previous ruling that stopped the FDA from approving Norwich’s new application for what amounted to a new generic version of Bausch Health’s Xifaxan. Under the ruling, Norwich’s drug couldn’t have been approved until 2029. However, with the new suit—if it goes through—Norwich will be able to get approved for the new drug much faster and have it competing with Xifaxan much sooner. Tentative approval, meanwhile, has already been issued, though the final approval date is what’s up in the air.
With the new drug approved, if only tentatively, that’s a serious risk to Bausch Health’s ability to compete, and some investors are already pulling out in recognition of that risk. It’s still only a risk for right now, though, and the thing investors fear most may never actually happen. It’s especially troubling since Xifaxan is one of Bausch Health’s biggest growth drivers. Specifically, it’s a big driver for Salix Pharmaceuticals, which is part of Bausch Health.
Analysts, meanwhile, are about as split as investors are. Bausch Health stock is currently rated a Hold on the basis of one Buy, one Sell, and three Hold ratings. Those who buy in, meanwhile, may see 8.75% upside potential based on its average price target of $7.83.