As the spouse of someone who was laid off as a result of a Valeant acquisition, I'm torn between hoping they go under and hoping they get a decent board/leadership and start making ethical decisions. Pearson disrupted so many careers through their process of buying patents & firing almost all of the staff of most of these companies he purchased.
It annoys the hell out of me when I see articles referring to Valeant's "acquisition and cost-cutting" strategies. No, they were slashing and burning. What they did to the companies was not "cost cutting", it was corporate raiding plain and simple.
I'm hoping to see them burn all the way down so that everybody who invested in them, knowing full well that their whole business plan was shady as hell, loses all the money they invested. It seems we're already 80% the way there, at least.
Don't get me wrong, I think Valeant is shady as hell, but what's the difference between cost-cutting and slashing-and-burning?
The companies Valeant purchased did not have a gun to their head and I'm sure they were fairly compensated when purchased. Who cares what Valeant does after the acquisition?
It's one thing to buy a company and then do layoffs to realize efficiency gains, and another to buy a company essentially for its IP and fire everybody. Sure, it's "cost cutting" taken to its logical extreme. But it's also incredibly wasteful and disruptive.
Valeant's was able to overpay for these companies because it was betting that its shady practices would allow it to realize outsize gains for the IP acquired, and that's turning out to be a bad bet. So not only have they gutted numerous companies, disrupting the lives of many researchers and others, but they are also now under a mountain of debt and have a bunch of husks of companies that aren't worth near what they were paid for. It's lose/lose/lose. The only people who made out are the ones who original owned the companies Valeant bought.
The issue is that Valeant's business model of buying assets and firing everyone else except sales and marketing was/is pretty attractive to Wall Street. Pharma's return on R&D investment has been horrible, so when Pearson said "we don't do R&D", it got some people pretty excited.
Regardless, that business model has been proven to be a poor strategy. Good drugs come from R&D. Can you snap up a bunch of "ok" drugs and sell them through shady techniques? Sure, but it catches up with you eventually.
Take a look at their product line.[1] Jeeze. It's either branded medication that has no real use (since you can get products that are just as good for cheaper) or brand name drugs where the generic already exists. If either a doctor or insurance company was paying attention, none of those drugs would ever be used. Maybe I'm going overboard with that statement, but it's mostly true.
Valeant never was a pharmaceutical company, it was a sales and marketing company for a bunch of low quality drugs.
>It's one thing to buy a company and then do layoffs to realize efficiency gains, and another to buy a company essentially for its IP and fire everybody.
Isn't that basically what Google did with Motorola?
No, not at all. Motorola Mobility was bleeding cash for years (basically since the end of life for the original Razor -- they didn't have any profitable phones again until the X & G). Yes, Google wanted their patent portfolio, but it's not like MMI was making money before the acquisition ... which was why even prior to the Google purchase Motorola had split into MMI & MSI, which is absolutely profitable selling radio gear & services.
Sometimes they do sort of have a gun to their head. A lot of times these acquisitions are via hostile takeovers approved by a board of directors/shareholders against the will of senior leadership (much less the rank & file).
Who cares what Valeant does after the acquisition? People care. When Pfizer purchased King Pharmaceuticals (you've probably never heard of King, but they patented the Epi-Pen epinephrine auto-injector), they got rid of about 450 of 550 employees, keeping only a few compliance & research folks along with the sales team. When Valeant purchased Salix (patent holder for Xifaxin, which is one of Valeant's only winners right now), they laid off about 800 of 1100 staff (again, keeping primarily the sales team). Valeant used about $11b in debt + Valeant stock (no cash) to purchase Salix. The debt has been downgraded to junk status and the stock has lost 90% of its value. Tell me this was good for anyone (even the Valeant side!).
If it's hostile takeover, it's because the shareholders want to sell. Who care what management wants? They gave up the right to run the company independently when they sold shares to the public market.
I'm not really one for the "greed is good mantra", but I do think it's really interesting where each person is willing to balk and vocally oppose what someone does to profit. In this case, I believe you're implying that you oppose at will employment (which I think is a reasonable stance).
I do oppose at will employment. I also oppose abuse of the WARN act by so many corporations doing mass reductions in force. I thirdly oppose unethical business practices, even if it means not maximizing "shareholder value". There have been so many small pharmas snatched up by the big guys the past few years, all in the name of buying drug patents to maximize shareholder value because conducting original research is "too expensive". Those small pharmas are made of people, good people, doing good, valuable work (often original research, ironically). To me, the way the pharmaceutical industry has been behaving over the past decade -- between this and the ubiquitous inversion mergers to move HQs to Ireland -- is unacceptable.
I don't get this. Valeant sold the drugs twice, but only because they:
Valeant made the drug
Valeant sold the drug to Philidor
Valeant bought the drug when it bought Philidor
Valeant sold the drug again.
The best I can tell, the issue is only that Valeant knew it was going to buy Philidor when it sold Philidor those drugs.
I really don't see how this matters. Even the Author seems to admit that it doesn't matter and that the real issue here is how Valeant was allegedly using Philidor to trick insurance companies into paying more for drugs.
IMO, that makes the whole article title clickbait.
> Employees were to first submit paperwork with Philidor’s national provider identifier, or NPI, and if that didn’t work were to then try with the NPIs of partner pharmacies, according to a Philidor training manual. “We have a couple of different ‘back door’ approaches to receive payment from the insurance company,” said the manual, dated October 2014.
It seems more correct to say that their real goal was to have a set of "independent" pharmacies (but really not) that would pay high prices for Valeant's drugs but still appear to insurers to be doing so because the pharmacies concluded Valeant was the best supplier on its merits, not because they were secretly controlled by Valeant. Seems like someone should be spending time in Club Fed, but won't happen of course.
Anyone familiar with the pharmaceutical industry could tell Valeant wasn't headed anywhere but down.
Just take a look at their portfolio of drugs. There is nothing special there. For the most part they were selling brand names drugs in diseases where a generic drug would work just fine. The only reason they made money is because they used every trick in the book to make sure nobody noticed what they were doing.
The company was bound to fail at some point in time.
as a user of some of their medications, they can go to hell. $950 for a tube of cream for a skin condition (without insurance) and $5 for the tube with insurance.
Its crazy. First prescription I got was through philidor and i never saw the cash price for the drug, after Philidor went under they partnered with Walgreens and thats where i saw the cash price for the drug.. holy crap.
