Biovail update:
When the execs at Biovail and Valeant sat down with analysts last June to hype their approaching reverse merger, one of the highlights of their discussion focused on the $175 million in cost savings--involving the termination of up to 870 staffers--that would follow the combination of the two developers. It turns out that they were thinking small. This morning the cost synergies had spiked to more than $300 million, and the merger will cost the jobs of fully 25 percent of their combined staffs instead of the 20 percent discussed earlier in the summer.
In what amounts to a Dear John letter for many of their workers, Valeant Chief Executive J. Michael Pearson penned his plans to realize "well north of $200 million" in savings next year with the rest to follow in 2012, according to a report from Reuters. And while R&D efforts will continue to get their backing, Pearson outlined plans to acquire in-line products that can swiftly deliver expanded revenue.
Virtually every big tie-up in biopharma these days involves job cuts. Wall Street demands it and executives at a slate of Big Pharma have delivered with big rounds of cost-cutting moves in the wake of mergers. Valeant has been investing heavily in dermatology drug development, while Biovail has made its reputation in the CNS field.
- here's the Reuters story
VALEANT PHARMACEUTICALS INTERNATIONAL (VRX=US)
Tue Sep 7, 2010 9:23am EDT
* To cut jobs at US and Canadian operations of new co
* Job cut a part of integration plans
* Says identified $300 mln in cost synergies
Sept 7 (Reuters) - U.S.-based Valeant Pharmaceuticals International (VRX.N), which agreed to be bought by Canada's Biovail Corp (BVF.TO) in June, said they would cut about 25 percent of the combined company's U.S. and Canadian workforce as part of the integration plans.
"Over $300 million of cost synergies have been identified and we expect to realize well north of $200 million in 2011," Valeant Chief Executive J. Michael Pearson said in a letter to the employees.
"The rest will be captured in 2012," Pearson, who will be heading the new company, added. The companies have a combined workforce of about 4,400.
Combined cash tax rate by the end of 2012 is expected to be about 15 percent. The companies had agreed to merge in a complex deal that is structured to take advantage of tax breaks and other savings. [ID:nSGE65K07S]
Pearson said that while the new company would continue to invest in research and development, it would focus on acquiring smaller in-line products that can be grown "dramatically" through the company's infrastructure and commercial processes.
Valeant shares closed at $59.98 Friday on the New York Stock Exchange, while Biovail shares closed at C$24.94 on the Toronto Stock Exchange.
Biovail shares have risen 68 percent, while the Valeant stock has increased 31 percent since the news of the deal.
Bladerunner
(Neuro, do you think the Pimavanserin program is in danger of being dropped?)
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