Valeant’s New CFO Will Review 2016 Numbers, CEO Papa SaysBy and
Asset sales will be announced in next six months, Papa says
Some divested assets may go for less than Valeant paid
Valeant Pharmaceuticals International Inc.’s new chief financial officer will review the drugmaker’s numbers for this year and next after the company surprised the market in August by reaffirming its 2016 forecast, Chief Executive Officer Joe Papa said in an interview Tuesday.
Paul Herendeen was announced as CFO on Aug. 22, joining from Zoetis Inc., an animal health company. Valeant said on Aug. 9 that it would hit its target given earlier in the year of $9.9 billion to $10.1 billion in sales, and adjusted earnings before interest, taxes, depreciation and amortization of $4.8 billion to $4.95 billion. To do so, the company will have to outperform its first-half results during the second part of the year.
“It’s important for me to have Paul come in and take a look at the numbers for 2016 and 2017 and beyond,” Papa said in an interview after the company’s presentation at the Morgan Stanley health-care investing conference in New York.
Papa has been rebuilding the executive team at Valeant over the past few months, bringing in Herendeen, as well as a new general counsel and a new corporate controller. The drugmaker, which is based in Laval, Quebec, and run from New Jersey, is in the process of selling non-core assets to help pay down some of its about $31 billion in debt.
Some of those deals will be announced in the next six months, Papa said.
“There are a number of parties interested in the assets,” he said. Some could be sold for less than what Valeant initially paid for them, he said, and others could be sold for more.
Valeant, whose shares are down 88 percent in the last 12 months, is facing multiple investigations over its business practices and has been criticized for aggressively raising prices of drugs. Built through acquisitions, the company is now trying to get on stable footing under Papa, who was announced as CEO in April. The stock declined 3.8 percent to close at $27.53 on Tuesday.
It will take “the first three to six months just to stabilize the company,” Papa said. “After that, we’re looking for the second phase, which I would refer to as a turnaround phase. That’ll take a year or two.”
In one of the company’s last high-profile acquisitions, Valeant spent $1 billion to buy the maker of the female libido pill Addyi. It’s the first drug of its kind approved in the U.S., but has had a lackluster start to sales. In April, people familiar with the matter said Valeant had terminated the sales force for the pills.
Papa said the company would relaunch the drug but didn’t specify a date. He said he’s awaiting feedback from the U.S. Food and Drug Administration about promotional materials for the treatment.
Valeant will also cut back on promotion of its drugs by temporarily halting direct-to-consumer marketing for its products, such as television and magazine ads. The drugmaker will instead refocus efforts on having sales representatives spend more time with doctors.
“It was really a back-to-basics approach,” Papa said.