December 17, 2015
By Alex Keown, BioSpace.com Breaking News Staff
LAVAL, Quebec – J. Michael Pearson, the embattled chief executive officer of Valeant Pharmaceuticals International Inc. , is urging investors to look past recent scandals that caused company stock to drop by more than 50 percent and focus on innovations that will help the company grow, Bloomberg reported this morning.
During a shareholders meeting, Pearson pledged to be more transparent when it comes to data about company business and performance of its approved drugs. At the same time, Bloomberg described him as being more defiant when it comes to company strategy, which has largely been based on mergers and acquisitions, as well as the use of specialty pharmacy companies. It was something shareholders responded to, as company stock increased by about 7 percent following the meeting. Stock prices have dipped this morning, with Valeant trading at $115.43 per share, down from Wednesday’s close of $118.47 per share. Since a high of $259.98 per share price on Aug. 4, Valeant’s has plummeted to a year-low of $72.38 per share.
Earlier this week, Valeant provided an update to its finances, projecting total revenue of $12.5 to $12.7 billion for 2016, as well as a reduction of debt by about $2.25 billion. The company did adjust its fourth quarter revenue predictions for 2015 to $2.7 billion, down from a projected $3.25 to $3.45 billion.
Another move that helped endear Pearson’s leadership to shareholders were some recent moves, including a deal with Walgreens to sell of its branded products at a 50 percent discount. The company said it will sell some of its name brand products used for “dermatology, ophthalmology, gastrointestinal and neurology/other therapeutic areas” at generic prices, if there are generics of that drug. Additionally, Valeant will reduce all of its dermatological and ophthalmological products by 10 percent in Walgreens.
Pearson told the shareholders that 2015 has been a tough year for both him and the company and added that if the board of directors wished to terminate his position, they could. Until that time, “we’re gonna get through this thing,” he said, according to Bloomberg.
This has been a tough year for Pearson, who has watched the company’s market share decline, despite leading it through several acquisitions. Pearson came to Valeant in 2008 and under his leadership expanded the company through aggressive mergers and acquisitions, taking over companies like Salix Pharmaceuticals and Bausch & Lomb. Under his leadership, revenue has grown seven-fold and stock prices had soared, until earlier this year when the company’s troubles came to light. Pearson has also been under pressure by some investors, particularly Bill Ackman, the company’s third-largest shareholder, who has been critical of Pearson and the company’s crisis communications strategy, before ultimately expressing his support for the CEO.
Despite that growth though, Valeant has been under attack for the pricing of some of its drugs, as well as its relationship with the specialty pharmacy company Philidor Rx Services that has drawn allegations of falsely inflating revenues, earning the company the moniker of the “pharmaceutical Enron,” by short-selling group Citron Inc. In an October release, Citron Research decried Valeant for its “unsavory business practices of massive price raises on pharmaceuticals acquired in a rapid succession of acquisitions, while slashing research and development.” Additionally, the Citron report criticized Valeant’s relationship with Pennsylvania-based Philidor Rx Services, a specialty pharmacy decried by Valeant last year. Philidor engages in the “prescriptions made easy” practice. Under this practice, a pharmaceutical company encourages physicians to submit prescriptions for the high-priced medication to a mail-order pharmaceutical company associated with the parent pharmaceutical company. That pharmacy sends the medication to the patient and then directly deals with the insurance company.
Valeant is also facing scrutiny from U.S. lawmakers and two U.S. attorney’s offices over pricing of drugs acquired through acquisitions. Valeant is under fire for a price increase of two recently-acquired cardiac drugs, Nitropress and Isuprel, after the company acquired Salix Pharmaceuticals, Ltd. Valeant then increased the prices for those drugs by 212 percent and 525 percent, respectively. Valeant acquired the two drugs in April.
In addition to the two cardiac drugs, Valeant has also been criticized for quadrupling the price of the 55-year-old drug Cuprimine, used in the treatment of Wilson disease. A New York Times article excoriated Valeant for its practice of increasing the price of drugs following an acquisition. According to a Deutsche Bank report, Valeant increased prices on its brand-name drugs an average of 66 percent, about five times more than its other competitors, the Times said.
