Valeant's New CEO Criticized By Man Who Succeeded Him at Perrigo

Published: May 13, 2016

Valeant's New CEO Criticized By Man Who Succeeded Him at Perrigo May 13, 2016
By Alex Keown, Breaking News Staff

DUBLIN – John T. Hendrickson, the new chief executive officer at Perrigo , decried the recent performance of the company under the leadership of Joseph Papa, who resigned to lead rival Valeant Pharmaceuticals .

During a conference call with investors, Hendrickson said the company’s “recent track record of performance against our own expectations is unacceptable,” Bloomberg reported. Hendrickson said he was setting up a forecast for Perrigo that he called realistic for the company to meet.

When the company announced Papa’s departure this week, Perrigo also reported it was cutting its economic forecast for the year. Ram Selvaraju, an analyst with Rodman & Renshaw, told Bloomberg that Papa was leaving the company he helmed for nearly a decade in “terrible shape.”

“It looks like he’s abandoning ship and going to another company that’s even more troubled,” Selvaraju told Bloomberg.

While at Perrigo Papa led the effort to stave off a takeover by Mylan , something he called a “bad deal” for company shareholders. He also oversaw the acquisition of U.S. rights to a gastroenterology medicine Entocort from AstraZeneca for $380 million as well as the acquisition of Patheon’s Mexico operations for $34 million. Papa also oversaw the deal to acquire Omega Pharma, which Papa said provided the company with “a pit and-European branded consumer healthcare business that is delivering greater benefits than we originally expected.”

However, that fight against Mylan caused Perrigo to lose approximately 50 percent of its value, Bloomberg said. Shares of Perrigo are currently down, trading at $88.83 per share.

Papa resigned from his position at Perrigo on April 24 and was promptly named the new CEO at Valeant on April 25. He assumed his new duties this month. Shares of Valeant fell in early trading today, after closing Thursday at $24.93, its lowest price in more than six months. However, Valeant stock has since rallied more than 3 percent to $25.79 per share, as of this writing. Since Papa took over at Valeant, shares have continued to decline, although much of that is still fallout from the leadership of former CEO Michael Pearson and the controversy surrounding its drug pricing and relationship with specialty pharmacy company Philidor Rx Services. Valeant is also still dealing with the fact it has yet to file its 10-K report with the U.S. Securities and Exchange Commission. Last week, Valeant said it anticipates its delayed filing to happen before June 10.

Before Papa took over at Valeant, the company brought in investment banks to review its financial options, which could include divesting itself of some of its bigger assets. What those assets are have not been disclosed, but executives said it was unlikely Valeant would sell off any of its core assets.

Since taking over, Papa has put in place a committee to oversee drug pricing, Bloomberg reported. The committee is responding to criticism of Valeant’s aggressive practices of acquiring older drugs and increasing their prices. The company has been criticized for two recently-acquired cardiac drugs, Nitropress and Isuprel, which the company gained after acquiring Salix Pharmaceuticals . Valeant increased the prices for those drugs by 212 percent and 525 percent, respectively. Valeant has pledged to offer discounts to hospitals and other care providers for those two drugs, but has not yet done so, Bloomberg noted.

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