- Cuts said to affect gastrointestinal, dermatology divisions
- Drugmaker plans to relaunch Addyi sales later this year
Valeant Pharmaceuticals International Inc. has terminated the sales force for the female libido pill that it acquired last year for $1 billion, people familiar with the situation said, after the drug, Addyi, failed to gain traction in its first six months on the market.
Valeant plans to relaunch its sales effort for Addyi with an internal team it will build in the coming months, according to the people, who asked not to be identified because the matter was private. The drug will still be available in the meantime.
Along with the 140 contract workers that make up the Addyi sales force, Valeant is firing about 140 employees across its dermatology, gastrointestinal and women’s health divisions, with dermatology taking the biggest hit, according to one of the people. Valeant has about 22,000 employees.
“While the former team did a great job getting regulatory approval for Addyi, and despite our best efforts with respect to commercialization, sales of Addyi have not met our expectations yet,” outgoing Chief Executive Officer Mike Pearson said in a memo to employees obtained by Bloomberg and confirmed as authentic by a Valeant spokeswoman.
Pearson said the dermatology division would be downsized because the company has “received increasing feedback from doctors that we have too many people calling on them to discuss closely related products.”
Laurie Little, a Valeant spokeswoman, declined to comment on the changes. In the memo, Pearson said the company’s executives “are keenly focused on access and are moving forward with improvements and enhancements to our sales and marketing plans” for Addyi.
Valeant’s stock has plunged 90 percent since its August peak, after the company was questioned over its drug prices, criticized by presidential candidates, investigated by Congress, and had to cut ties with a mail-order pharmacy that critics said it was using to inflate sales. Pearson is leaving as CEO after the company reported weak fourth-quarter results and said it would restate some earnings. In addition, on Monday, the company was facing resistance from some of its lenders as it seeks to waive a default and loosen restrictions on its debt, according to people with knowledge of the matter. The shares fell 7.1 percent to $26.11 on Monday in New York.
The cuts to Addyi’s sales force come after a sluggish start for the drug, which is the first of its kind for women suffering from a low libido. Insurers have been denying or limiting coverage for the pill and many prescriptions written by doctors aren’t getting filled.
Valeant is also facing demands from a group of investors in Addyi’s original parent company, Sprout Pharmaceuticals. Last month, the investors sent Valeant a letter saying it had failed to successfully commercialize the treatment by setting the price too high and neglecting to market it, putting the drugmaker at risk of violating the merger agreement. They also asked for reassurances that Valeant would keep a sales force of 150 to distribute Addyi.
In Pearson’s memo, he did not specify how many sales people would be used to market Addyi.
In the gastrointestinal division, Pearson said different parts of the sales force would be integrated given the company’s increased focus on marketing Xifaxan for hepatic encephalopathy. The drug is also approved for irritable bowl syndrome with diarrhea.
“We expect there will be new opportunities for some of those affected to take on different roles within the company,” Pearson said in his note.