Question

I would like to discuss what happened to Valeant Pharmaceuticals at 12/31/2015 (what were the issues and what was there relationship to Philidor )? Is Valeant in business today ?

Answer 1

Valeant Pharmaceuticals (Valeant or the Company) suffered a huge setback in the year of 2015 when it's stock prices suffered a massive loss despite being the darling of Wall Street for a short period.

Valeant deviated from the typical core business of a pharma company, that is research & development. It reduced its focus and investment in the core research and instead adopted a vision to be a supply chain and drugs distribution company. It adopted the inorganic growth route via mergers and acquisitions, increased the prices of the drugs arbitrarily, cut costs and thus generate profits. The acquisitions were paid through funds raised from banks as debts, which one grew to a disproportionate range. This led to:

• Public rage and outcry due to increase in drugs prices sometimes as high as 400%, 900%
• Frustration among the investors due to mounting debt
• Pressure on profits as not all the mergers and acquisitions pursued by the firm turned out to be value accretive

Valeant suffered a massive blow when questions were raised on its relationship with Philidor. Based on the reports, it appeared that:

• Valeant used to book fake sales through Philidor
• Valeant had purchased the option buy Philidor
• Valent had paid some $ 100 million to Philidor to impose its drugs on the patients.
• Philidor was a pharmacy company and they were used a medium by Valeant to push its expensive drugs sales in the market.
• Valeant employees directly / indirectly operated and managed Philidor's posing as Philidor employees,bearing fictitious names.

Valeant is in business today, albeit in the name of Bausch Health Companies Inc. Effective July 2018, Valeant changed its name to a new name, Bausch Health Companies Inc., and a new ticker symbol, BHC, to replace VRX.