April 22, 2016
By Alex Keown, BioSpace.com Breaking News Staff
LAVAL, Quebec – Joseph Papa, current chairman and chief executive officer of Dublin-based Perrigo , could be the next top executive at Valeant Pharmaceuticals .
News reports indicate the embattled Valeant is close to finalizing a contract to tap Papa to lead the next chapter of the company and replace outgoing CEO J. Michael Peterson. While the Canadian pharmaceutical company is hoping to announce Papa as early as next week, there are some snags. Bloomberg and Reuters reported there may be some complications with Papa’s current Perrigo contract. Both agencies said Perrigo may not be willing to void Papa’s non-compete clause, which is necessary for Papa to assume the helm of Valeant. Until that is resolved, or Valeant chooses to find another CEO candidate, Pearson will remain at the helm of the company.
Pearson’s departure from Valeant was announced only weeks after he returned from medical leave that sidetracked him for about two months. In March, Valeant’s board of directors initiated a search for a new CEO to replace the recently returned Pearson at the helm of the company. Robert Ingram, chairman of Valeant’s board of directors, said he believes the company “will be able to rebuild its reputation and thrive under new leadership.” Bill Ackman, one of Valeant’s largest shareholders and a recent addition to the company’s board of directors, said in late March that Valeant was weeks, rather than months away from naming Pearson’s successors, indicating a search may have been underway while Pearson was hospitalized from pneumonia in the early part of the year.
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 and the acquisition of Patheon’s Mexico operations for $34 million. He also oversaw the deal to acquire Omega Pharma, which Papa said provided the company with “a pan-European branded consumer healthcare business that is delivering greater benefits than we originally expected.”
Pearson’s ouster was not totally surprising given the difficult eight months Valeant has had, which included a loss of about 80 percent of its stock value since August 2015. Valeant has been embattled by for months. What once was seen as a strong performer in the market due to its aggressive mergers and acquisitions, may now seem like only a shell of itself to investors. In August, Valeant stock was trading as high as $263.70, but accounting concerns over its specialty pharmacy company Philidor Rx Services and other issues have negatively impacted the company. Valeant shares hit a low of $25.98 per share in March.
Any new CEO at Valeant will have to contend with the company’s debt issue, which has been jeopardized due to a delay in filing its annual report. The company said it plans to file those reports by the end of this month, but the delay has upset some investors. The delay was caused after Valeant announced in February it believes approximately $58 million of net revenues reported in the second half of 2014 “should not have been recognized upon delivery of product to Philidor.” Correcting the misstatements is “expected to reduce reported 2014 GAAP EPS by approximately $0.10 and increase 2015 GAAP EPS by approximately $0.09.”
Earlier this month, Valeant 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 Ackman and other executives said it was unlikely Valeant would sell off any of its core assets.
