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MONTREAL — The share price of Valeant Pharmaceuticals International Inc. dropped nearly 40 per cent Wednesday and trading was halted twice after controversial short-seller Citron Research published a report questioning whether the Laval, Que.-based company could be the “Pharmaceutical Enron.”

The report lowered its target for Valeant to US$50 from over US$200, saying that it had a “smoking gun” uncovering undisclosed relationships with specialty pharmaceutical companies.

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Citron Research has delivered the proof that something really stinks at Valeant and it is goes beyond their egregious price hikes, said the report

“Citron Research has delivered the proof that something really stinks at Valeant and it is goes beyond their egregious price hikes,” the report said.

Citron alleges that Valeant is padding its sales figures. The report suggests that Valeant is using pharmacies, related to dispensary Philidor Rx Services, to store inventory, and is then recording those transactions as sales. Valeant shares recovered some ground after the company’s statement, and closed at US$118.61 in New York. That still represented a 19 per cent drop, the company’s biggest one-day decline since 2011.