2010–2016: the Pearson years
On September 28, 2010, Valeant merged with Biovail. The company retained the Valeant name and J. Michael Pearson as CEO, but was incorporated in Canada and temporarily kept Biovail's headquarters.[22][23] Setting on a path of aggressive acquisitions, Pearson ultimately turned Valeant into a platform company that grows by systematically acquiring other companies.
In February 2011, Valeant acquired PharmaSwiss S.A. for €350 million.[24] In July 2011, Valeant acquired Ortho Dermatologics from Janssen Pharmaceuticals for $345 million. The acquisition included the products Retin-A Micro, Ertaczo, and Renova, also known as tretinoin.[25] In August 2011, Valeant acquired 87.2% of the outstanding shares of Sanitas Group for €314 million.[26] In December 2011, Valeant acquired iNova Pharmaceuticals for A$625 million from Australian private equity firms Archer Capital with additional milestone payments of up to A$75 million.[27] In December 2011, Valeant acquired Dermik, a dermatology unit of Sanofi.[28]
In January 2012, Valeant acquired Brazilian sports nutrition company Probiotica for R$150 million.[29] In February 2012, Valeant acquired ophthalmic biotechnology company Eyetech Inc.[30] In April 2012, Valeant acquired Pedinol.[31] In April 2012, Valeant acquired assets from Atlantis Pharma in Mexico for $71 million.[32] In May 2012, Valeant acquired AcneFree for $64 million plus milestone payments.[33] In June 2012, Valeant acquired OraPharma for approximately $312 million with up to $144 million being paid in milestone payments.[34] In August 2012, Valeant agreed to buy skin-care company Medicis Pharmaceutical for $2.6 billion.[35]
In May 2013, the company acquired Bausch & Lomb from Warburg Pincus for $8.7 billion in a move to dominate the market for specialty contact lenses and related products.[39][40][41]
In January 2014, Valeant acquired Solta Medical for approximately $250 million.[42] In May 2014, Nestle acquired the commercial rights to some of Valeant's products for $1.4 billion.[43] In July 2014, Valeant acquired PreCision Dermatology Inc for $475 million.[44][45]
On April 1, 2015, Valeant completed the purchase of gastrointestinal treatment drug developer Salix Pharmaceuticals for $14.5 billion after outbidding Endo Pharmaceuticals.[46][47][48] On the final day of trading, Salix shares traded for $172.81, giving a market capitalisation of $10.9 billion. After the acquisition, Valeant raised the price of the diabetes pill Glumetza drastically.[49][50] In July 2015, the company announced it would acquire Mercury (Cayman) Holdings, the holding company of Amoun Pharmaceutical, one of Egypt's largest drugmakers, for $800 million.[51][52]
On October 21, 2015, Citron Research founder Andrew Left, a short seller of Valeant shares, published claims that Valeant recorded false sales of products to specialty pharmacy Philidor Rx Services and its affiliates. Valeant controlled these specialty companies, allegedly resulting in improper revenue bookkeeping.[61] In addition, by controlling the pharmacy services offered by Philidor, Valeant allegedly steered Philidor's customers to expensive drugs sold by Valeant. One alleged practice entailed Valeant employees directly managing Philidor's business operations while posing as Philidor employees, and with all written communication under fictitious names.[62] Valeant responded that the allegations by Citron Research were "erroneous".[63] On October 30, 2015, Valeant said that it would cut ties with Philidor in response to allegations of aggressive billing practices.[64] Walgreens Boots Alliance Inc, owner of Walgreens, took over distribution for Valeant.[65]
An important part of the growth strategy for Valeant under Michael Pearson was the acquisition of medical and pharmaceutical companies and the subsequent price increases for their products.[66][67] This strategy attracted the attention of regulators in the United States,[67] particularly after the publication in The New York Times of an article on price gouging of specialty drugs.[68][69][70][49]
In September 2015, an influential group of politicians criticized Valeant on its pricing strategies.[71] The company raised prices on all its brand name drugs 66% in 2015, five times more than its closest industry peer. The cost of Valeant flucytosine was 10,000% higher in the United States than in Europe.[72][73] In late September 2015, members of the United States House Committee on Oversight and Government Reform urged the Committee to subpoena Valeant for their documents regarding the sharp increases in the price of "two heart medications it had just bought the rights to sell: Nitropress and Isuprel. Valeant had raised the price of Nitropress by 212% and Isuprel by 525%".[70][50]
By October 2015, Valeant had received subpoenas from the U.S. Attorney's Office for the District of Massachusetts and the United States Attorney for the Southern District of New York in regards to an investigation on Valeant's "drug pricing, distribution and patient assistance program."[74] The House Oversight Committee also requested documents from Valeant amid public concern around drug prices.[75][76]
In October 2015, the Federal Trade Commission began an investigation into Valeant's increasing control of the production of rigid gas permeable contact lenses. Valeant's acquisition of Bausch & Lomb in 2013, and Paragon Vision Services in 2015, is alleged to have given the company control of over 80% of the production pipeline for hard contact lenses. A series of unilateral price increases beginning in Fall 2015 spurred the FTC's investigation.[77] On November 15, 2016, Valeant agreed to divest itself of Paragon Holdings and Pelican Products to settle charges that its May 2015 acquisition of Paragon reduced competition for the sale of FDA-approved "buttons", the polymer discs used to make gas permeable contact lenses.[78][79]
In their 2015 annual report filed on April 29, 2016, Valeant said that it was the "subject of investigations" by the Securities and Exchange Commission, the U.S. Attorney's Offices in Massachusetts and New York, the state of Texas, the North Carolina Department of Justice, the Senate's Special Committee on Aging, and the House's Committee on Oversight and Reform, and had received document requests from the Autorite de Marches Financiers in Canada and the New Jersey State Bureau of Securities."[80]
In January 2016, presidential candidate Hillary Clinton said she would be "going after" Valeant for its price hikes, causing its stock price to fall 9 percent on the New York Stock Exchange.[81][82]
On April 27, 2016, Bill Ackman, J. Michael Pearson, and Howard Schiller were forced to appear before the United States Senate Special Committee on Aging to answer to concerns about the repercussions for patients and the health care system faced with Valeant's business model.[83]
By April 2016, the market value of hedge fund holdings in Valeant had fallen by $7.3 billion. Hedge fund herding[84] continued to incite hedge fund portfolio managers to continue to buy Valeant shares. From 2015 to 2017, Valeant shares plummeted more than 90 percent. This was later featured in episode 3 of the first season of the Netflix documentary Dirty Money.[85][86] In 2017, Ackman's Pershing Square fund, which held a major stake in the company, sold out for a reported loss of $2.8 billion.[87][88]
