The state of the pharmaceutical space, and in particular its drug pricing strategy, has been under intense scrutiny over the last twelve months or so. The debacle kicked off with the Martin Shkreli, Daraprim situation, but quickly expanded to engulf a number of major biotechs and pharmaceutical companies, to culminate in a Hilary Clinton tweet, a number of investigations and served papers, and finally, a broad weakening of the sector as a whole.

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As mentioned, a number of companies took a hit on the situation, but a few in particular drew unwanted attention. Why? Because their individual business practices put them directly in the target of any potential price reform, and in turn, painted them as possible losers if politics forces a shift in strategy. One company in particular has attracted a lot of heat, and lost a large percentage of its market capitalization as a result – Valeant Pharmaceuticals Intl Inc (NYSE:VRX).

Valeant’s strategy across the last half decade has been rapid and aggressive expansion of both its product portfolio and its annual revenues, but not through the established research and development process with which most biotech and pharmaceuticals organizations operate. Instead, the company has made a habit of buying legacy treatments, or drugs that have been developed by smaller companies, and raising the prices of said drugs.

The strategy went pretty much unnoticed (or at least, not widely scrutinized) until the already mentioned Shkreli drew mainstream attention to it. Now outside eyes are weighing in, however, companies that practice such strategy, and there’s no bigger than Valeant, are suffering, and suffering for a number of reasons.

First, shareholders are pulling capital out of the market in anticipation of pricing reform. When whomever gets in to power at the end of the US presidential race, and particularly if it’s Hilary Clinton, chances are one of the first things on their, or her, agenda will be addressing the way companies price drugs, and the way these drugs are funneled through the supply chain and to the end user. It goes without saying that the companies who rely on price hikes to boost revenues will be the first and hardest hit by this type of reform.

Second, shareholders are wary of buying into companies that are exposed to this pricing reform, meaning the companies in question are struggling to raise capital in an already tight environment.

So why are we talking about this today? Well, around this time of each week, we generally look at which companies have moved the most in the biotech space. Across Tuesday’s session, two companies moved more than any others – one was Valeant. The other, Endo International plc – Ordinary Shares (NASDAQ:ENDP).

Across the session, Valeant lost more than 51% of its market capitalization to close out at $33.51. It’s up slightly pre session on Wednesday, but chances are this is just a temporary correction and we are in for further downside throughout the remainder of the session. The decline comes as Valeant reported it is now in danger of defaulting on its $30 billion debt – debt that it has amassed as a result of its aggressive expansion strategy – in the wake of an earnings restatement. In August last year, Valeant topped out at $262 a share. Its current price represents an 87% discount to these highs, and the company still looks expensive at this rate.

Endo is purely collateral damage from the Valeant decline. The company has a very similar expansion and operations strategy to Valeant, and this has weighed on its valuation over the last six months or so. Back in April, 2015, Endo traded at $96 a share. Fast forward to the beginning of this week and this had dropped to a little over $42. Across Tuesday’s session, and despite no real fundamental news other than that of Valeant’s potential default, Endo lost 23%, and now trades just ahead of $32.

The lesson here, is that whatever revenue growth a company may be posting, if there is a fundamental industry change around the corner that has the potential to derail its operations, it could be in trouble. Further, that this trouble is contagious. All said, both Valeant and Endo look to be companies worth steering clear of for the moment.