- Drugmaker has been searching for a new CEO since March
- Papa joined Perrigo in 2006, fended off hostile bid from Mylan
Valeant Pharmaceuticals International Inc. hired Perrigo Co. CEO Joseph Papa as its new chief executive officer and chairman, tasking him with turning around an embattled drugmaker that has faced multiple setbacks over the past months.
Papa will start in early May, Valeant said in a statement Monday. The 60-year-old executive has more than 35 years of experience in the pharmaceutical and health-care services industries, including 20 years at branded prescription drugmakers, Valeant said.
The new CEO is moving from one troubled drugmaker to another. Perrigo’s stock has dropped in the past months after Papa fought off a hostile takeover by Mylan NV, and plunged further Monday as it cut its forecast and said it might take a writedown on a 2015 deal. At Valeant, he’ll have to rebuild from the ground up following controversies over the drugmaker’s business practices, accounting and drug pricing last year. Valeant has yet to file its 2015 financial statements, which were delayed pending a review of its now-severed relationship with a controversial mail-order pharmacy.
Valeant’s shares rose 2.8 percent to $37 at 9:51 a.m. in New York. The stock had tumbled more than 80 percent since its August peak. The company had been searching for a new leader since March, when it said that CEO Michael Pearson would leave once a replacement was found as part of a broader overhaul that included adding activist investor Bill Ackman to its board.
Papa may have the ability to restore investor confidence in Valeant, given his record persuading Perrigo shareholders that they shouldn’t accept the hostile bid from Mylan, according to Bloomberg Intelligence analyst Elizabeth Krutoholow. The new direction may be welcome, but there are many hurdles to overcome, Krutoholow wrote. Among other things, Valeant must rebuild its reputation, grow without mergers and acquisitions and respond to a congressional price probe on drug pricing, the analyst said.
Papa, who fended off Mylan’s $26 billion bid in November, had joined Perrigo in 2006. Before that, he held management positions at companies including Novartis AG and Watson Pharmaceuticals Inc.
Perrigo announced that Papa resigned on Monday. He will be replaced by John Hendrickson, who’s been president for six months after holding a number of management roles since joining in 1989.
Perrigo’s stock slumped 10 percent to $108.91 Monday, bringing its decline for the past 12 months to about 43 percent. Perrigo said it now expects preliminary earnings per share, excluding some items, of $8.20 to $8.60, down from the $9.50 to $9.80 range given in February, mostly because competition put pressure on prices for prescription drugs. The company said it may take an impairment on its March 2015 purchase of Omega Pharma NV.