Valeant Slumps as New CEO Faulted by Successor at Perrigo

  • Perrigo’s new CEO calls recent track record ‘unacceptable’
  • Papa hired to improve Valeant’s fortunes after missteps

Shares of Valeant Pharmaceuticals International Inc. fell 5.4 percent after the past performance of its new chief executive officer, Joseph Papa, was criticized by the CEO who succeeded him at his previous company.

Papa, who took over this month to help turn around the embattled Valeant, was hired from Perrigo Co., a maker of generic drugs he had led since 2006. His successor at Perrigo, John Hendrickson, lambasted the company’s performance on Thursday, saying in a conference call with analysts that “recent track record of performance against our own expectations is unacceptable.” He also said he’s targeting ”realistic” forecasts the company can meet.

When Perrigo announced Papa’s departure last month, the company also cut its earnings forecast and said it may have to write down assets from its 2015 acquisition of Belgian drugmaker Omega Pharma NV. Over Papa’s tenure, Perrigo’s shares rose more than 10-fold, only to lose more than half their value in a year as the company fended off a takeover bid from Mylan NV.

”Basically Joe Papa just high-tailed it out of Perrigo, and kind of left the company in shambles,” said David Amsellem, an analyst at Piper Jaffray who rates Valeant stock underweight.

Valeant closed at $24.93, its lowest since November 2010. Perrigo shares declined 4 percent to $89.04. 

Valeant has now declined for seven straight trading days, the longest streak since June 2014. Also weighing on the stock was a report in the New York Times on Thursday, saying that the has not yet made good on its pledge to give hospitals discounts on two expensive heart drugs, Nitropress and Isuprel.

In his first move after taking over, Papa created a committee responsible for drug pricing last week.

“Our goal in offering bulk discounts on Nitropress and Isuprel through group purchasing organizations was to ensure that those hospitals most impacted by the change in price received discounts of up to 30 percent, based on the amount they use,” Valeant said in a statement. “The Senate hearing two weeks ago revealed that there may be gaps in that process, and the Patient Access and Pricing Committee we formed last week is working to identify those gaps as well as develop solutions so any hospital that is eligible for discounts on Nitropress and Isuprel receives them.”

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