It’s been a tough year for Valeant Pharmaceuticals, the Canadian company that sent Chief Executive Officer Michael Pearson packing on March 21. Shares have fallen about 90 percent since mid-August, when Bernie Sanders and Representative
Elijah Cummings (D-Md.) asked Valeant to explain price hikes for two heart medications. Such increases were central to the company’s strategy; it borrowed heavily to buy drugs, then sharply raised prices. In the past month, Valeant disclosed it was the subject of a U.S. government probe, warned it would restate earnings, cut sales guidance, and named activist investor Bill Ackman to its board. −Mark Glassman
① Limited growth options
Much of Valeant’s sales growth has come from aggressive price hikes— which it’s now sworn off—and M&A.
② Weak drug pipeline
Relying on takeovers, Valeant has spent relatively little on research and development.
③ Regulatory woes
The U.S. Securities and Exchange Commission is investigating the company’s accounting and pricing.
④ Deep in debt
Valeant says it may breach debt agreements; as of 2015’s third quarter, it had debt of more than
$30b $3b due in 2018