Valeant picks new CFO in ongoing company shakeup

Valeant Pharmaceuticals International Inc. chose Paul Herendeen, a former executive at Warner Chilcott PLC and veterinary drugmaker Zoetis Inc., as its new chief financial officer in an ongoing leadership shakeup sparked by an accounting scandal.

The shares rose after the news, and closed up 9.66 per cent, or $2.57 to $40.57, in Toronto. Herendeen spent 16 years as finance chief of specialty drugmaker Warner Chilcott and health-care company MedPointe, before joining Zoetis in September 2014, according to a statement Monday. His appointment at Valeant is effective immediately.

The drugmaker, which has about US$31 billion in debt, is making key executive changes while attempting to recover from accounting and business-practices problems, and restore investors’ confidence. Valeant replaced chief executive officer Michael Pearson this year with Joseph Papa, who had been CEO of Perrigo Co. Two months after announcing the CEO change, Valeant appointed a new chief accounting officer. Other top executives have left, as well.

Herendeen’s experience at Warner Chilcott may prove valuable, because that drugmaker was also managing a heavy debt burden brought on by acquisitions, BTIG analyst Tim Chiang said.

“Paul knows this business model from a financial perspective,” said Chiang, who has a neutral rating on the stock. “By bringing in the right people at the exec level, I think the board’s hope is that they can create a floor to this hole, that the company doesn’t sink any deeper.”

The shares, which have lost 88 per cent of their value since their August 2015 peak, have rebounded in recent weeks as some analysts regained faith in the drugmaker.

The Laval, Quebec-based company is facing investigations from Congress, the U.S. Securities and Exchange Commission, and federal prosecutors. Last week T. Rowe Price Group Inc. sued Valeant.