Valeant Pharmaceuticals

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Valeant Pharmaceuticals International, Inc.
Type Public company
Traded as NYSEVRX
TSXVRX
S&P/TSX 60 component
Industry Pharmaceutical industry
Founded 1960
Headquarters Laval, Quebec, Canada
Key people J. Michael Pearson (Chairman & CEO)
Products Cesamet (nabilone)
Efudex
Mestinon
Diastat
Ribavirin (licensed to Schering Plough)
Revenue $3.5 billion (2012)[1]
Website www.valeant.com

Valeant Pharmaceuticals International, Inc.[pronunciation?] is a publicly traded pharmaceutical company based in Montreal, Canada.[2] The focus of the company is on neurology, dermatology and infectious disease with several drugs in late-stage clinical trials and several currently on the market. In addition, Valeant has a portfolio of more than 500 products from its prior history as a group of specialty chemical and radiochemical research, development and supply companies with a history stretching back to the 1960s.

Valeant sells a wide range of drugs, including over-the counter medications and medical devices, as well as prescription drugs such as antidepressant Wellbutrin XL.[1] Kinerase, which uses kinetin as active ingredient, is one of the most popular products of Valeant.

An important part of the growth strategy for Valeant has been acquisitions, sometimes in the multi-billion dollar range, of medical and pharmaceutical companies.[1] As of May 2013, the company was valued at $29.2 billion, making it the 17th largest public company in Canada. It is the largest pharmaceutical company in Canada.[2]

History[edit]

Valeant was founded as a United States business.[1] It has undergone major management, operational and strategic restructurings since the 1990s when shareholders of several group units approved the merger of ICN Pharmaceuticals (founded by Milan Panić), ICN Biomedicals, SPI Pharmaceuticals and Viratek into a new global entity, ICN Pharmaceuticals, the immediate forebear of Valeant.

In 2008 the Swedish pharmaceutical company Meda AB bought branches in Western and Eastern Europe from Valeant Pharmaceuticals for $392 Million.[3]

Mergers and acquisitions[edit]

2008

In September, Valeant acquired Coria Laboratories, Ltd for $95 million, acquiring the outstanding shares from Corias parent company DFB Pharmaceuticals, Inc.[4] In November, Valeant acquired DermaTech for about $12.6 million.[5] In December Valeant announced their acquisition of Dow Pharmaceutical Sciences, Inc for $285 million.[6]

2009

In July, Valeant announced its acquisition of Tecnofarma, a Mexican generic company.[7] In December Valeant announced its Canadian subsidiary would acquire the cosmeceutical Canadian company, Laboratoire Dr. Renaud, for C$23 million.[8]

2010

In March, Valeant announced its acquisition of a Brazilian generics and over the counter company for $28 million and manufacturing plant for a further $28 million.[9]

In April Valeant announced that its Canadian subsidiary would acquire Vital Science Corp. for C$10.5 million.[10] In May 2010, Valeant announced that it was acquiring Aton Pharmaceuticals for about $318 million.[11]

On September 28, 2010, Valeant was purchased by Biovail. The new company retained the Valeant name and kept J. Michael Pearson as CEO, but was incorporated in Canada and temporarily kept Biovail's headquarters.[12] In May 2011, former Biovail Corporation Chairman and CEO Eugene Melnyk was banned from senior roles at public companies in Canada for five years and penalized to pay $565,000 by the Ontario Securities Commission. In the year before the merger with Valeant, Melnyk had settled with the United States Securities and Exchange Commission (SEC), agreeing to pay a civil penalty of $150,000 US having previously paid $1 million U.S. to settle other claims with the SEC.[13]

Since the 2010 merger, Valeant has aggressively expanded through acquisition. It makes about 25 deals a year, according to CEO Mike Pearson, most of which are too small to require financial reporting.[1] Deals usually focus on specialized high-margin markets such as dermatology and eye care.[2] A total of 14 purchases were publicly announced from 2010-early 2013.

2011

In March, an attempt to buy drugmaker Cephalon Inc. for $5.7 billion was unsuccessful.[1] but Valeant acquired PharmaSwiss S.A..[14] In August, Valeant acquired 87.2 % of the outstanding shares of Sanitas Group for EUR314 million.[15] In December Valeant acquired iNova for A$625 million with additional milestone payments of up to A$75 million[16] as well as acquiring Dermik, a dermatology unit of Sanofi[17]

2012

In January Valeant acquired Brazilian sports nutrition company Probiotica Laboratorios Ltda for R$150 million.[18] In February Valeant acquired ophthalmic biotechnology company, Eyetech Inc.[19] In April Valeant acquired Pedinol.[20] In June Valeant acquired OraPharma for approximately $312 million with up to $144 million being paid in milestone payments.[21] In August, Valeant agreed to buy skin-care company Medicis Pharmaceutical for $2.6 billion. The price, $44/share in cash, represented a 39% premium on Medicis' stock.[22] Valeant projected annual R&D and overhead cost cutting of $225 million from the deal. An analyst for Forbes said "the deal ticks all the right boxes for Valeant share holders."[22] The deal was the largest of the 14 announced mergers.[1]

2013

In January, Valeant acquired the Russian company Natur Produkt for $163 million.[23] In March, Valeant acquired Obagi Medical Products, Inc. for $19.75 per share.[24] In May, Valeant agreed to buy Bausch & Lomb, a maker of contact lens solution and surgical devices, from Warburg Pincus LLC for US$8.57 billion in cash.[1] The deal, which was approved by shareholder, includes $4.2 billion earmarked to pay down Bausch & Lomb debt.[2] It is Valeant's largest acquisition to date and will be financed by with $1.5-$2 billion of new equity, and $6–7 billion of new debt.[1] The new debt will bring the company's total to approximately $18 billion. Analyst Neil Maruoka called the purchase an "excellent fit" for Valeant.[2] The company's stock rose about 25% when the deal was announced.[2]

Valeant's existing eye care businesses will be moved to the Bausch & Lomb headquarters in Rochester, New York.[1] The company expects to achieve at least $800 million annually in cost savings, mostly from reduced R&D and overhead, as a result.[2] The acquisition will help Valeant enter markets such as China that it previously did not compete in.[1] Valeant will employ roughly 18,000 people after the deal is complete, which is expected to occur in the third quarter of 2013.[1][2]Bausch & Lomb was founded in 1853 acquired by Warburg Pincus in 2007 in a leveraged buyout.[1][2] Warburg Pincus had previous attempted to sell Bausch & Lomb for $10 billion. Bausch & Lomb had filled for an initial public offering after failing to find a buyer. The company had $3 billion of sales in 2012.[1]

Valeant CEO Mike Pearson said the company would continue to pursue mergers and acquisitions in the near future, but would need three or four month to get a handle on Bausch & Lomb before deciding on its next target. "We certainly continue to explore, continue to have discussions and we hope [mergers of equals] will eventually be part of the playbook", Pearson told investors in a conference call.[1] He added that the company would "never fall in love with any of our assets" and would sell an asset to the right buyer.[1] Maruoka said one of Valeant's core strengths is its ability to integrate large acquisitions with its existing businesses.[2]

2014

In January Valeant acquired Solta Medical, Inc. for approximately $250 million.[25] In February, Valeant would acquire PreCision Dermatology Inc for $475 million, a deal aimed at strengthening the firm’s skin products business.[26] In May, it was announced that Nestle would acquire the commercial rights to sell Valeants filler and toxin products for $1.4 billion.[27]

Failed Allergan acquisition attempt[edit]

On April 22, 2014, details were released by Valeant and hedgefund CEO, Bill Ackman, about a $46 billion (CAD) offer presented to Allergan.[28] Valeant is proposing to exchange $48.30 in cash and 0.83 shares of Valeant per Allergan share. Allergan Inc. stockholders would own 43 per cent of the combined company. This bid was rejected by Allergan as being too risky, claiming Valeant's business model of serial acquisitions and low organic growth being unsustainable. Soon after Valeant released a statement saying a new offer will be presented May 28, 2014, where it emerged that Valeant had increased their offer to $49.4 billion.[29] On May 31 the offer was revised and increased to $53.3 billion.[30] On June 18, Valeant began its tender offer for a hostile takover of Allergan.[31] In August 27 2014, Valeant and Pershing Square Capital Management asked a Chancery Judge to set a trial for September 24 2014 to decide on whether Valeant and Pershing had properly secured enough support from Allergan shareholders to force a meeting of investors to consider replacing a majority of the company’s directors.[32] On the same day Allergan announced that they had set a December shareholder vote to decide whether the company should replace part of the board of directors.[33] In the afternoon of August 27, Bloomberg reported that Valeant and Pershing Square had won their case with the Chancery Judge setting an October 6 date for the aforementioned trial.[34] On November 17, 2014, Actavis announced it would acquire Allergan for approximately $66 billion, putting an end to Valeants hostile takeover attempt.[35]

References[edit]

  1. ^ a b c d e f g h i j k l m n o p Alex Wayne (May 28, 2013). "Valeant Agrees to Buy Bausch & Lomb in $8.7 Billion Deal". Bloomberg. Retrieved May 28, 2013. 
  2. ^ a b c d e f g h i j Richard Blackwell; Sean Silcoff; Bertrand Marotte (May 27, 2013). "Valeant Pharmaceuticals eyes China with Bausch deal". The Global and Mail. Retrieved May 29, 2013. 
  3. ^ "Swedens Meda AB Buys American Valeant Pharmaceuticals International Units for 392 Million". Biodpace.com. Retrieved 7 October 2014. 
  4. ^ "Valeant - Valeant Pharmaceuticals Signs Agreement to Acquire Coria Laboratories, Ltd.". Ir.valeant.com. Retrieved 7 October 2014. 
  5. ^ "GEN - News Highlights: Valeant Pharmaceuticals Acquires DermaTech for $12.6M". GEN. Retrieved 7 October 2014. 
  6. ^ "Valeant - Valeant to Acquire Dow Pharmaceutical Sciences, Inc. for $285 Million". Ir.valeant.com. Retrieved 7 October 2014. 
  7. ^ "Valeant - Valeant to Acquire Tecnofarma, A Mexican Generic Company". Ir.valeant.com. Retrieved 7 October 2014. 
  8. ^ "Valeant - Valeant to Acquire Laboratoire Dr. Renaud in Canada". Ir.valeant.com. Retrieved 7 October 2014. 
  9. ^ "Valeant - Valeant to Acquire Branded Generics/OTC Company in Brazil". Ir.valeant.com. Retrieved 7 October 2014. 
  10. ^ "Valeant - Valeant to Acquire Vital Science Corp. in Canada". Ir.valeant.com. Retrieved 7 October 2014. 
  11. ^ "UPDATE 1-Valeant Q1 profit beats Street; to acquire Aton Pharma". Reuters. May 3, 2010. 
  12. ^ "Drugmaker Biovail to buy Valeant in $3.3 billion deal". Reuters. June 21, 2010. 
  13. ^ "Senators owner Melnyk banned for five years from boardrooms of public companies The Financial Post by Barbara Shector, May 5, 2011". Retrieved 2011-05-05. 
  14. ^ "Valeant - Valeant Pharmaceuticals Completes Acquisition of PharmaSwiss S.A.". Ir.valeant.com. Retrieved 7 October 2014. 
  15. ^ "Valeant - Valeant Pharmaceuticals Agrees to Acquire Sanitas Group for Approximately EUR314 Million in Cash". Ir.valeant.com. Retrieved 7 October 2014. 
  16. ^ "Valeant - Valeant Pharmaceuticals Agrees to Acquire iNova". Ir.valeant.com. Retrieved 7 October 2014. 
  17. ^ "Valeant - Valeant Pharmaceuticals Completes Acquisition of Dermik". Retrieved 7 October 2014. 
  18. ^ "Valeant - Valeant Pharmaceuticals Acquires Probiotica in Brazil". Ir.valeant.com. Retrieved 7 October 2014. 
  19. ^ "Valeant - Valeant Pharmaceuticals to Acquire Eyetech". Ir.valeant.com. Retrieved 7 October 2014. 
  20. ^ "Valeant - Valeant Pharmaceuticals to Acquire Pedinol". Ir.valeant.com. Retrieved 7 October 2014. 
  21. ^ "Valeant - Valeant Pharmaceuticals Agrees To Acquire OraPharma". Ir.valeant.com. Retrieved 7 October 2014. 
  22. ^ a b "Valeant To Acquire Medicis for $2.6 Billion". Forbes. September 3, 2012. Retrieved June 2, 2013. 
  23. ^ "Valeant - Valeant Completes Acquisition Of Natur Produkt In Russia". Ir.valeant.com. Retrieved 7 October 2014. 
  24. ^ "Valeant - Valeant Pharmaceuticals International, Inc. Agrees to Acquire Obagi Medical Products, Inc. for $19.75 Per Share in Cash". Ir.valeant.com. Retrieved 7 October 2014. 
  25. ^ "Valeant - Valeant Pharmaceuticals International, Inc. Completes Acquisition Of Solta Medical, Inc.". Ir.valeant.com. Retrieved 7 October 2014. 
  26. ^ Euan Rocha (4 February 2014). "Valeant to buy PreCision Dermatology for $475 million". Reuters. 
  27. ^ "Nestle acquires rights toValeant skincare products". Bloomberg. Retrieved 29 May 2014. 
  28. ^ "Valeant, Bill Ackman bid $45B for Botox-maker Allergan". Canadian Associated Press / CBC. Retrieved 22 April 2014. 
  29. ^ "Valeant raises offer for Allergan". Bloomberg. Retrieved 29 May 2014. 
  30. ^ "Valeant raises offer for Allergan for second time". Bloomberg. Retrieved 31 May 2014. 
  31. ^ "Valeant Begins Tender Offer for Allergan Hostile Takeover". Bloomberg. 18 June 2014. Retrieved 7 October 2014. 
  32. ^ Jef Feeley (27 August 2014). "Allergan Says Valeant Seeking Hearing on Shareholder Meeting". Bloomberg. Retrieved 7 October 2014. 
  33. ^ "Allergan Sets December Shareholder Vote on Valeant Bid". Bloomberg. 27 August 2014. Retrieved 7 October 2014. 
  34. ^ Jef Feeley (27 August 2014). "Valeant, Ackman Win Bid to Fast-Track Allergan Case". Bloomberg. Retrieved 7 October 2014. 
  35. ^ http://www.bloomberg.com/news/2014-11-17/actavis-to-buy-allergan-for-66-billion-tops-valeant-bid.html