Valeant CEO Pearson Still Hospitalized After Pneumonia CareBy
Company says it will update his condition when `appropriate'
Pneumonia cause of more than 50,000 U.S. deaths in 2013
Valeant Pharmaceuticals International Inc.’s chief executive was discharged from a New Jersey hospital after treatment for “severe” pneumonia, though is still hospitalized.
Michael Pearson, who leads the drugmaker battered by scandals and questions about sales, was discharged by the Morristown Medical Center, a hospital spokeswoman, Elaine Andrecovich, said Sunday. Laurie Little, a spokeswoman for Valeant, said Pearson is still in a hospital, but wouldn’t say where. The company said he was hospitalized over Christmas.
“Out of respect for Mike’s family and their privacy, we will only provide updates when appropriate,” Little said in an e-mail.
Pneumonia is an infection of the lungs caused by bacteria, a virus or fungi, with symptoms including cough, fever and difficulty breathing. With treatment, most patients improve within 1 to 3 weeks, according to the American Lung Association. About 53,000 people in the U.S. died of it in 2013, said the Centers for Disease Control and Prevention.
Earlier this month, Pearson, 56, urged investors to look past concerns that have sent the stock of the Laval, Quebec-based company down more than 50 percent from its August peak and said they should focus on products that will grow beyond expectations.
He promised shareholders to provide more transparent data about Valeant’s business, including sales figures for its top 30 drugs. But his tone was more defiant than apologetic when discussing the company’s strategy, which has drawn scrutiny from lawmakers and investors for its use of mail-order pharmacies, price increases and acquisitions for growth.
Pearson had been working recently to win back investors’ trust. He reached a deal with Walgreens Boots Alliance Inc. to sell Valeant drugs in the drugstore chain’s pharmacies at a discount.
“If the company continues on the path that it’s on, they need Mike Pearson,” said Dimitry Khmelnitsky, an analyst with Veritas Investment Research Corp. in Toronto who covers the company. “When you have a company that has aggressive business practices, you need somebody who is an outside-the-box thinker, who’s willing to take substantial risks.”
Investors will probably react negatively to Pearson’s hospitalization because he is the company’s architect and key strategist, he said.
“Investors hate uncertainty,” he said. “When you have uncertainty about a company, stock prices could suffer.”
Khmelnitsky, who has a sell rating on Valeant, has said the company is unsustainable because it relies on acquisitions, price increases, research and development cuts and off-shore tax structures to generate growth in the long term. As the size of acquisitions increase, so does the risk of failure, Khmelnitsky said. Price increases generate intense public attention, he added.
Valeant came under scrutiny in October about its relationship with mail-order pharmacy Philidor Rx Services. Former Philidor employees have alleged that the pharmacy altered some doctors’ orders to specify that they wanted brand-name drugs instead of generics, a way to get larger reimbursements for Valeant from health insurers. Philidor said that it only filled prescriptions with medications that doctors and patients requested. Valeant has cut ties with Philidor.
Unsustainable billing practices on certain drugs have hurt the company’s relationship with plan benefit managers and insurers who foot the bill for the company’s products, Khmelnitsky said.
New leadership could “de-risk” the company and make it more sustainable, Khmelnitsky said.
In the short term, chief financial officer Robert Rosiello and lead director Robert Ingram are qualified to lead the company, he said.
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