Valeant Taps M&A Expert as New CFO As Dealmaking Roars

Published: Jun 12, 2015

Valeant Taps M&A Expert as New CFO As Dealmaking Roars
June 12, 2015
By Alex Keown and Riley McDermid, Breaking News Staff

LAVAL, Quebec – Robert L. Rosiello will take over the role of chief financial officer at Canadian drugmaker Valeant Pharmaceuticals International, Inc. , the company announced this morning.

Rosiello will take over the financial duties from Howard Schiller on July 1. Schiller is expected to remain on the company’s board of directors and serve as a consultant to Valeant.

Rosiello is a force when it comes to mergers and acquisitions, something that is necessary in the current state of the biotech industry, which has seen numerous acquisitions over the past few years. Valeant, which specializes in eye medications, including glaucoma-treating medication Vesneo, has been one of the central players in the latest pharmaceutical and biotech trend of growth through acquisition.

Last year Valeant lost out to Actavis plc on its bid to acquire Botox-maker Allergan Inc. , however in April the company said the effort still generated $287 million in net profit for Valeant. In April though, Valeant won a bidding war against Endo Pharmaceuticals to acquire Salix Pharmaceuticals, Ltd. , the maker of Xifaxan, a drug used to treat traveler’s diarrhea and liver disease, for approximately $11 billion in cash. The completion of that deal made the Valeant one of the leading providers of treatments for gastrointestinal disorders.

In May the company was in talks to acquire Egyptian-based Amoun Pharmaceutical Co. to expand its veterinary and human medication portfolio. Acquiring Amoun would allow Valeant to expand on its gastrointestinal product pipeline. Amoun manufactures five drugs for various gastrointestinal disorders, including an anti-obesity medication, an antacid and Antodine, an H2 blocker used for acid reflux. Amoun has approximately 30 products in its pipeline, the company said on its website.

There has been a flurry of large pharmaceutical companies snapping up smaller startups and entities, including Pfizer Inc. ’s $17 billion merger agreements with Illinois-based Hospira, Inc., or Amgen ’s acquisition of Onyx Pharmaceuticals, Inc. for $10 billion in 2013. That’s added up to an estimated $100 billion spent on pharmaceutical mergers and acquisitions since 2014, and more than 245 deals this year alone, which underscores the need for someone with Rosiello’s background at Valeant.

Before coming to Valeant, Rosiello spent 30 years at McKinsey & Company helping healthcare, technology and consumer companies deliver growth through mergers and acquisitions and business unit financial performance improvement. As a senior partner in charge of the global merger practice for the past decade, Rosiello led mergers and acquisitions integrations for pharmaceutical, specialty pharmaceutical and medical device companies in the U.S., Europe and Asia.

J. Michael Pearson, chief executive officer of Valeant, said the high rate of mergers and acquisitions over the past year created a “bit of a bubble.” Speaking at a conference in Toronto, Pearson said some of the acquisitions that have been made will not work. He also said the prices of some made sense, while others were out of the norm. He said the M&A pace cold be too fast to sustain. Pearson said Valeant is constantly looking for good deals with a focus on emerging markets, such as the Amoun deal.

Pearson, who said he’s known Rosiello for more than 20 years, touted Rosiello’s expertise.

“Rob is someone I have worked closely with for 20 years. I know his tremendous expertise in healthcare and in particular M&A, his unquestioned intellect, and work ethic and integrity will prove to be of great value to the Valeant organization and its shareholders, he said in a statement.

Additionally Pearson praised Schiller’s service to the company, saying he will continue to “rely on his valuable counsel” as a member of Valeant’s board of directors. Schiller announced his decision to step down from the CFO position in April. Schiller, 53, joined Valeant in December 2011 as CFO and was appointed to the board of directors of Valeant in September 2012.

Rosiello serves on the Board of Catholic Charities of New York, the Pew Research Center and the Central Selection Committee of the Morehead Cain Foundation. He received his BA in economics from the University of North Carolina (UNC), where he was a Morehead Scholar. He also earned an master of sciences from the London School of Economics and an MBA from Harvard University.

Valeant Pharmaceuticals International, Inc. (VRX) has attracted a lot of attention for its C-level lineup, after its $50.6 million paycheck for Executive Vice President Ari Kellen made him the second-highest freshly hired non-chief executive in the U.S., second only to Apple ’s new sales chief, Angela Ahrendts.

According to summary compensation table data compiled by Bloomberg in April and public filings, Kellen got performance-based stock awards of $36.6 million in front-loaded pay, $752,885 in salary, a $5 million cash bonus linked to Valeant’s recent buyout of Bausch & Lomb, $6.5 million in additional restricted share units as part of a stock matching program, and a $1.8 million annual cash bonus.

That puts him in the very top-tier of highest paid corporate honchos anywhere, said the news service, including most biotech executives.

“Kellen’s package is almost five times larger than that of Valeant CEO Michael Pearson, who received $10.3 million,” said Bloomberg.

Kellen has only been with Valeant since January 2014, when he came on board as executive vice president and company group chairman. His purview includes eye health, dermatology, research and development, and Valeant’s Latin American units.

Joe Kager, a managing consultant at POE Group, a compensation consulting firm, told Bloomberg that a pay package that size will certainly raise eyebrows--in any sector.

“If you have a new hire and you had to take them away from another competitor, sometimes you’ll see a substantial grant,” Kager said. “It’s not that atypical if he’s really a shooting star, but it is an awfully large number.”

After AstraZeneca CMO Abruptly Quits, Where Could He Be Headed?
This week the chief medical officer of British drugmaker AstraZeneca PLC abruptly quit his post to become the chief executive officer of an unnamed, smaller biotech company. That’s lead BioSpace to wonder, with his background in R&D and in large companies like Pfizer Inc. , where will Briggs Morrison wind up? We want to know your thoughts.

Back to news