Valeant Pharmaceuticals has taken the decision to rename itself in an effort to distance the company from a series of pricing scandals that occurred under previous CEO J. Michael Pearson. Following the loss of nearly 93 percent of its value, the much maligned firm has announced that it will adopt the name Bausch Health Companies, in reference to its better-known and well respected subsidiary, eyecare products enterprise Bausch & Lomb, which was acquired in 2013.
“Valeant is a very different company today than it was a year ago”
Joseph Papa, CEO, Valeant
Between September and November of 2015, Valeant suffered a series of devastating blows, after it attracted the attention of politicians, regulators and the media in response to the company’s aggressive growth strategy which was branded “deeply immoral” by investor Charlie Munger.
Under Pearson’s leadership, Valeant adopted a controversial pricing strategy which saw the business enact rampant price hikes on life saving medicines, resulting in anti-fungal medication Flucytosine costing USD 2,000 per day in the United States compared to just USD 22 in the United Kingdom. Following widespread scrutiny, the company suffered a massive loss in value, as share prices plummeted by more than 90 percent.
However, following the appointment of Joseph Papa as CEO, Valeant has attempted to shake off their reputation as a price-hiker through a pervasive program of divestment, which has seen it sell off many of its subsidiaries in an effort to reduce debt and settle a plague of outstanding lawsuits. Having reduced its debt by 20 percent over the last two years, Valeant’s renaming initiative, which will be fully adopted in July, is one piece in a wider strategy aimed at restoring the company’s reputation. Papa is determined to transform the company and suggested in a recent statement that progress is already underway. “Valeant is a very different company today than it was a year ago,” claimed Papa, while conceding that “we realize there is more progress to be made.”
“While the new name may help assuage some of the distrust associated with the highly stigmatised Valeant brand, the company must still resolve a plethora of underlying issues”
Nevertheless, while the new name may help assuage some of the distrust associated with the highly stigmatised Valeant brand, the company must still resolve a plethora of underlying issues. A serious debt crisis is being compounded by a plethora of resource-draining lawsuits. Despite having settled a number of lawsuits in 2017, proceedings with the US Department of Justice, the US Attorney’s offices in Massachusetts and New York, and the Securities and Exchange Commission continue to trouble the afflicted business.
Thus, despite Valeant’s valiant efforts at minimising the damage, with USD 25 billion in debt at the end of 2017, a rapid turnaround does not seem to be on the horizon; at least in the short-term. As Carreen Winters, chairman of reputation at public relations firm MWWPR, notes, “Financial statements don’t go away — they follow you.”
Writer: Louis Goss