What happened

Shares of Bausch Health Companies (BHC 0.35%) fell 54.4% this week, according to data from S&P Global Intelligence. The stock closed last Friday at $8.77 then opened Monday at the same price. The stock didn't begin to tumble until Thursday when it hit its 52-week low of $4 a share. It's 52-week high is $30.01, and it is down more than 85% so far this year.

So what

The stock went into free fall on Thursday, and trading was halted on the pharmaceutical company after Bloomberg reported that the company had been dealt an unfavorable ruling in a patent dispute. A Delaware judge found that some patent claims to Xifaxan (rifaximin)to treat irritable bowel syndrome were invalid, clearing the way to a planned generic version of the drug by Norwich Pharma Services.

It's the latest bit of upheaval for Bausch. It replaced its CEO on May 6, and on June 20, Joseph Papa resigned as the chairman of the company's board of directors. In the company's first-quarter report, issued on May 10, it listed a revenue drop of 5%, year over year, and a net loss of $69 million. At that point, rising Xifaxan sales were one of the few bright spots in the report. The company is scheduled to release second-quarter earnings on Aug. 9.

Now what

The huge drop for the shares of the pharmaceutical company may be a bit of an overreaction by the market. While Xifaxan was accountable for $1.64 billion in sales last year, that's a small part of the company's overall revenue. It issued guidance that it expects to bring in full-year revenue between $8.25 billion and $8.40 billion this year. The company has also focused on trimming its long-term debt.

The company completed its spin-off of Bausch + Lomb as a pure-play eye-health company earlier this year, so once the impact of that change is fully felt, it may make sense for investors to tread warily -- even at bargain prices. The company has gone through four consecutive years of net income losses, so it may take a while to turn things around.

Editors Note: This article has been corrected to accurately reflect Xifaxan sales as $1.64 billion instead of $1.64 million.