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Valeant CEO calls it 'turnaround opportunity of a lifetime'
[NEW YORK] Valeant Pharmaceuticals International Inc. became a household name with its historic rise and fall. Reviving the drugmaker is proving a unique challenge.
"This is a turnaround opportunity of a lifetime," chief executive officer Joseph Papa, who took over in May 2016, said during a presentation Wednesday at the JP Morgan Healthcare Conference in San Francisco.
Mr Papa has cut the total debt burden by more than US$6 billion from a peak of US$32 billion just before he joined, through asset sales and refinancing, while trying to increase revenue. He still has a long way to go. Dermatology is one area lagging behind the rest, Mr Papa said.
"Dermatology has been a challenge for us, to be quite clear," the CEO said at the conference, one of the biggest annual gatherings in the industry. "This is one business segment that's a little further behind in the turnaround."
The stock has rallied 51 per cent in the past two months after Papa maintained profit forecasts and a top product posted modest sales growth. But the stock is still trading about 35 per cent below levels when the CEO came on board in 2016. The shares dropped 1.8 per cent to US$23.43 as of the close of New York trading Wednesday.
Mr Papa expects the dermatology business to improve with new products, such as a plaque psoriasis treatment called Duobrii that Valeant hopes will get approved by regulators this year. The company is also increasing its salesforce by 25 per cent, and moving about 80 sales reps to treatments for psoriasis, the chief executive said. The products getting a bigger push include Siliq, a treatment for the skin disorder approved last year.
Siliq has a "black box" warning that it could cause suicidal thoughts and is competing in a crowded disease area.
"We launched it with a small team of people given some of our constraints," Mr Papa said, citing the company's debt burden in an interview with Bloomberg News. Adding sales reps is "going to be an important expansion." After selling off a number of parts of the business, Mr Papa said he has done what he set out to do in that regard.
If there are "other opportunistic asset sales," he'd consider doing them, but said it's "not something we feel compelled to do in near term." Valeant, which has faced multiple government investigations and lawsuits from investors in the past two years, has resolved about 70 legal cases and investigations, according to Mr Papa.
At the end of December, Valeant and activist investor Bill Ackman's Pershing Square - a former champion of the drugmaker that sold its stake at a loss last year - agreed to settle investor claims that they engaged in insider trading in the unsuccessful 2014 takeover bid for Allergan.