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Valeant Pharmaceuticals International, Inc. (VRX - Analyst Report) received positive news when its New Drug Application (NDA) for its anti fungal cream Luzu 1% was approved by the Food and Drug Administration (FDA).

Luzu Cream, 1% has been approved in the U.S. for the topical treatment of a variety of skin diseases such as athlete's foot, jock itch (tinea cruris), and ringworm (tinea corporis), caused by the organisms trichophyton rubrum and epidermophyton floccosum, in patients aging 18 or above. These diseases are mostly caused by dermatophyte fungi.

The approval was based on positive results from three pivotal studies conducted in 679 patients suffering from either tinea pedis or tinea cruris.

Dermatology is the key focus area for Valeant and it continues to develop its dermatology portfolio. Last month, Valeant received approval for its topical triazole antifungal solution Jublia (efinaconazole) in Canada. 

Jublia has been approved for the treatment of mild-to-moderate onychomycosis, a fungal nail infection. The approval is still pending in the U.S.

Meanwhile, Valeant acquired Bausch+Lomb to strengthen its ophthalmology portfolio as well, which was a miniscule portion of Valeant’s overall portfolio.

The acquisition should also enable Valeant Pharma to penetrate into the growing eye health market fueled by an aging patient population, an increased rate of diabetes, and increasing demand from the emerging markets.

However, Valeant expects sales to be negatively impacted to the tune of $300 million in 2013 by generic competition for Zovirax, Retin-A Micro and a number of other brands. Valeant expects Vanos to lose patent protection in the U.S. and Wellbutrin in Canada in the fourth quarter of 2013.

Hence, we believe the recent approvals should help the company to replace some of the lost revenues.

Valeant currently carries a Zacks Rank #3 (Hold). Right now, Shire (SHPG - Analyst Report), Jazz Pharmaceuticals (JAZZ - Analyst Report), and Forest Laboratories (FRX) look attractive. While Shire and Jazz Pharma are Zacks Rank #1 (Strong Buy) stocks, Forest Labs is a Zacks Rank #2 (Buy) stock.

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