US drug firm Valeant's share price has tanked after it slashed its outlook for the rest of the year and is courting a debt default if it misses the deadline for its annual report filling

Billy Bambrough
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Ouch... Valeant share holders are going to need some painkillers after a fall like that (Source: Getty)

Shares in pharmaceutical firm Valeant have fallen by 50 per cent in New York, after it cut its revenue forecast for the year by 12 per cent.

The big pharma firm also risks breaching covenant by delaying its annual report, posing a debt default risk.

Valeant's share price has lost around 85 per cent since highs in August last year as its struggled to justify its changing business plan.

In a conference call with investors chief executive Mike Pearson, who has recently returned from medical leave, admitted that the company is “not operating on all cylinders,” but added, "we are committed to getting it back on track."

Valeant is now looking to sell non-core assets after rapid expansion in recent years through acquisitions.

Pearson didn't detail which areas of the business could be put up for sale.

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Announcing its results this morning, the company said it's expecting earnings of $9.50 to $10.50 a share.

Revenue is expected to come in between $11bn (£7.7bn) to $11.2bn, compared to a previous estimate of $12.5bn to $12.7bn.

Valeant revealed last month it would delay its annual report after questions were raised over its accounting practises. The firm is also expected to refill financial statements from 2014 and 2015.

The company is currently being investigated over accusations of inflating revenue in its dermatology business​, as well as for ramping up the price on some of its drugs.

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The deadline for Valeant to file its annual report is later today and defaulting on debts could make it more difficult to borrow extra cash and prompt existing lenders to call in loans.

Valeant has recently been working on drug distribution, rather than research and development and has faced accusations of profit gouging vulnerable patients.

The controversial business plan was created by Pearson and was met by disdain throughout the industry.

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