Valeant’s Shake-Up

Bloomberg Businessweek (Asia) - - COMPANIES/ INDUSTRIES -

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


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