Drug and skin care maker Valeant Pharmaceuticals is in the news these days for all the wrong reasons. First, Valeant got pulled into the debate on drug pricing. Lawmakers are investigating the company’s practice of buying drugs through corporate M&A and jacking up their prices, a strategy that Valeant will now rein in, according to company executives.
Valeant also is being scrutinized for its use of previously undisclosed specialty pharmacies to sell drugs. An over 70% tumble in its stock over the past three months has caused investors to lose faith, and Valeant’s prospects of becoming the consolidator that Pershing Square's Bill Ackman had imagined are all but out the window for now, say analysts.
Ackman first invested in pharma consolidation in April 2014 when he took a stake in Allergan and tried to orchestrate a merger with Valeant. When Actavis bought Allergan a year ago it netted Ackman’s fund a multi-billion dollar profit. He took cash proceeds from the Allergan deal and plowed it into Valeant this March, becoming a new champion for the company’s acquisitive ways. Then the trade began to backfire.
Still, the hedge fund manager who became obsessed with destroying Herbalife isn't throwing in the towel.
“The reports of my demise are greatly exaggerated,” he told The Wall Street Journal on Thursday.