Valeant Pharmaceuticals is always an interesting company to read about. Over the years the drug maker has frequented the news with talk of takeovers, failed bids, C-suite and board drama, shady business practices, and activist investors. In its most recent drama-filled episode, Valeant’s share price has fallen over 88% from its 52 week high in part due to increasing financial burden, crumbling leadership, and public outrage over high drug prices.
Bill Ackman, the activist investor whose Pershing Square Capital Management is the second largest shareholder is joining the board presumably in an effort to revive the troubled company. Sequoia Capital is also a major shareholder in Valeant and has pared back some positions within the last few weeks as the stock price has continued to tumble.
A turnaround of the company may prove to be difficult due to its $30+ billion debt load and lack of dry powder for new acquisitions. Transaction activity has traditionally fueled growth in this ever-changing company. Some of the company’s difficulties stem from large post-acquisition cutbacks in staff and drug development budgets. Controversy also surrounds its mail order pharmacy called Philidor, which was used to circumvent insurance companies and pharmacies to replace cheaper generic drugs with the company’s own more expensive drugs. The company is also plagued with claims of financial reporting inconsistencies and is locked in a public battle with former CFO and current board member Schiller. Stay tuned for more fun news about his one!