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Valeant -- >>> Embattled drugmaker Valeant taps Papa as new CEO


Kevin McCoy

USA TODAY

April 25, 2016



http://www.usatoday.com/story/money/2016/04/25/embattled-drugmaker-valeant-taps-papa-new-ceo/83489866/



Shares of Valeant Pharmaceuticals (VRX) fell Monday as the embattled drugmaker tapped a health care industry veteran at healthcare supplier Perrigo (PRGO) as its new chief executive and chairman.

Joseph Papa, who had been Perrigo's CEO since 2006, will lead Valeant's efforts to reverse a months-long stock plunge as the Canada-based drugmaker copes with investigations and criticism of its business model, the company said. He is expected to join Valeant by early May.

Shares of Valeant closed down 2.3% at $35.16, retreating from gains earlier in Mondays trading session. Perrigo shares, meanwhile, plunged 18.1% to a $99.40 close as the Dublin-based company cut its guidance for the year.

Valeant Chairman Robert Ingram characterized Papa as "the ideal leader" for the company in its current circumstances.

"He has a strong shareholder orientation, a background in science and an unmatched track record of accomplishments, highlighted by his ability to lead companies through times of transition and drive excellence across commercial, manufacturing and research and development platforms," said Ingram.

Papa will succeed J. Michael Pearson, who led Valeant during a period of rapid growth in recent years as the company completed a series of pharmaceutical industry acquisitions.

The strategy sent Valeant shares soaring to a high of $262.52 as recently as early August. But the stock has lost more than 86% of its value since then as federal prosecutors in Massachusetts and New York, the Securities and Exchange Commission and two congressional panels conduct investigations of the firm.

The probes focus on Valeant's drug distribution and pricing policies, including price spikes on several medications the company acquired via its pharma industry takeovers. Pearson is scheduled to testify about Valeant's business model at a Wednesday hearing of the Senate Special Committee on Aging.

Separately, Valeant has said it is on track to file its delayed 2015 annual report by Friday. The company postponed the filing following criticism of Valeant's since-cancelled business ties with Philidor Rx Services, a mail-order pharmacy that helped distributed the company's medications.

A report by prominent short-seller Andrew Left's Citron Research accused Valeant of creating a "network of phantom captive pharmacies" to steer pharmacy benefit managers to the drugmaker's more expensive medications. Valeant denied the allegation but named a special board committee to investigate while the company delayed its annual report.

The company subsequently said it would restate $58 million in financial earnings from late 2014 into 2015 based on review's findings.

While citing "continued significant challenges" for Valeant," Jeffrey Loo, a S&P Global Market Intelligence equity analyst, said Papa's "significant drug and distribution experience" made him a good fit for the company.

Following Papa's resignation, Perrigo elevated John Hendrickson, the company's president since October 2015, to the CEO post. Laurie Brlas, who chairs Perrigo's board, said Hendrickson, who led the company's global operations, "is an exceptional leader who is passionate about our mission."

Perrigo simultaneously cut its 2016 financial guidance, saying it expects full-year earnings per diluted share of $8.20 to $8.60. The company had previously forecast per share earnings of $9.50 to $9.80. Perrigo blamed the cut on reduction in pricing expectations in its prescription segment due to industry and competitive pressures.

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