April 25, 2016
Last week BioSpace (DHX) reported Papa was the favorite to take over for Valeant CEO J. Michael Pearson, who was ousted from his top spot after the company battled several scandals, including drug pricing and concerns over accounting practices largely related to the company’s relationship with specialty pharmacy company Philidor RX Services. Since August, Valeant’s stock has lost nearly 90 percent of its stock value, plunging from a high of $262.52 per share to a low of $26.11 per share earlier this month. However, after Papa’s name was leaked as Valeant’s choice for its next CEO on Friday, Valeant’s stock climbed in after-hours trading to $36.24 per share.
Papa resigned from his position at Perrigo on April 24 and was promptly named the new CEO at Valeant on April 25. Valeant said it anticipates Papa will assume his new duties in May.
“Valeant has world-class franchises, important treatments for patients across numerous therapeutic areas and a very talented and dynamic workforce, and I am confident that the company has a bright future ahead. We have an opportunity to move forward with a renewed focus on operating with integrity across all areas of the business and providing customers with safe and affordable products that improve their lives,” Papa said in a statement.
While at Perrigo, Papa led the effort to stave off a takeover by Mylan (MYL), something he called a “bad deal” for company shareholders. He also oversaw the acquisition of U.S. rights to a gastroenterology medicine Entocort from AstraZeneca for $380 million and the acquisition of Patheon’s Mexico operations for $34 million. He also oversaw the deal to acquire Omega Pharma, which Papa said provided the company with “a pit and-European branded consumer healthcare business that is delivering greater benefits than we originally expected.“
In addition to tapping Hendrickson, Perrigo announced it had separated the position of CEO and chairman of the board of directors. Perrigo tapped independent director Laurie Brlas to the role of board chairman.
Pearson’s departure from Valeant was announced only weeks after he returned from medical leave that sidetracked him for about two months. In March, Valeant’s board of directors initiated a search for a new CEO to replace the recently returned Pearson at the helm of the company. Robert Ingram, chairman of Valeant’s board of directors, said he believes the company “will be able to rebuild its reputation and thrive under new leadership.”
A new CEO at Valeant will likely be good news for investors, although there will still be plenty of challenges for a new top executive, including the company’s debt issue, which has been jeopardized due to a delay in filing its annual report. The company said it plans to file those reports by the end of this month, but the delay has upset some investors. The delay was caused after Valeant announced in February it believes approximately $58 million of net revenues reported in the second half of 2014 “should not have been recognized upon delivery of product to Philidor.”
Earlier this month, Valeant brought in investment banks to review its financial options, which could include divesting itself of some of its bigger assets. What those assets are have not been disclosed, but Ackman and other executives said it was unlikely Valeant would sell off any of its core assets.