4 ms·

It annoys the hell out of me when I see articles referring to Valeant's "acquisition and cost-cutting" strategies. No, they were slashing and burning. What they

It annoys the hell out of me when I see articles referring to Valeant's "acquisition and cost-cutting" strategies. No, they were slashing and burning. What they did to the companies was not "cost cutting", it was corporate raiding plain and simple. I'm hoping to see them burn all the way down so that everybody who invested in them, knowing full well that their whole business plan was shady as hell, loses all the money they invested. It seems we're already 80% the way there, at least.

refurb 11y ago
Don't get me wrong, I think Valeant is shady as hell, but what's the difference between cost-cutting and slashing-and-burning? The companies Valeant purchased did not have a gun to their head and I'm sure they were fairly compensated when purchased. Who cares what Valeant does after the acquisition?
- PascalsMugger 11y ago
  It's one thing to buy a company and then do layoffs to realize efficiency gains, and another to buy a company essentially for its IP and fire everybody. Sure, it's "cost cutting" taken to its logical extreme. But it's also incredibly wasteful and disruptive. Valeant's was able to overpay for these companies because it was betting that its shady practices would allow it to realize outsize gains for the IP acquired, and that's turning out to be a bad bet. So not only have they gutted numerous companies, disrupting the lives of many researchers and others, but they are also now under a mountain of debt and have a bunch of husks of companies that aren't worth near what they were paid for. It's lose/lose/lose. The only people who made out are the ones who original owned the companies Valeant bought.
  - refurb 11y ago
    The issue is that Valeant's business model of buying assets and firing everyone else except sales and marketing was/is pretty attractive to Wall Street. Pharma's return on R&D investment has been horrible, so when Pearson said "we don't do R&D", it got some people pretty excited. Regardless, that business model has been proven to be a poor strategy. Good drugs come from R&D. Can you snap up a bunch of "ok" drugs and sell them through shady techniques? Sure, but it catches up with you eventually. Take a look at their product line.[1] Jeeze. It's either branded medication that has no real use (since you can get products that are just as good for cheaper) or brand name drugs where the generic already exists. If either a doctor or insurance company was paying attention, none of those drugs would ever be used. Maybe I'm going overboard with that statement, but it's mostly true. Valeant never was a pharmaceutical company, it was a sales and marketing company for a bunch of low quality drugs. [1]http://www.valeant.com/operational-expertise/valeant-united-states http://www.valeant.com/operational-expertise/valeant-united-...
  - hkmurakami 11y ago
    >It's one thing to buy a company and then do layoffs to realize efficiency gains, and another to buy a company essentially for its IP and fire everybody. Isn't that basically what Google did with Motorola?
    - eitally 11y ago
      No, not at all. Motorola Mobility was bleeding cash for years (basically since the end of life for the original Razor -- they didn't have any profitable phones again until the X & G). Yes, Google wanted their patent portfolio, but it's not like MMI was making money before the acquisition ... which was why even prior to the Google purchase Motorola had split into MMI & MSI, which is absolutely profitable selling radio gear & services.
- eitally 11y ago
  Sometimes they do sort of have a gun to their head. A lot of times these acquisitions are via hostile takeovers approved by a board of directors/shareholders against the will of senior leadership (much less the rank & file). Who cares what Valeant does after the acquisition? People care. When Pfizer purchased King Pharmaceuticals (you've probably never heard of King, but they patented the Epi-Pen epinephrine auto-injector), they got rid of about 450 of 550 employees, keeping only a few compliance & research folks along with the sales team. When Valeant purchased Salix (patent holder for Xifaxin, which is one of Valeant's only winners right now), they laid off about 800 of 1100 staff (again, keeping primarily the sales team). Valeant used about $11b in debt + Valeant stock (no cash) to purchase Salix. The debt has been downgraded to junk status and the stock has lost 90% of its value. Tell me this was good for anyone (even the Valeant side!).
  - refurb 11y ago
    If it's hostile takeover, it's because the shareholders want to sell. Who care what management wants? They gave up the right to run the company independently when they sold shares to the public market.

refurb 11y ago

Don't get me wrong, I think Valeant is shady as hell, but what's the difference between cost-cutting and slashing-and-burning? The companies Valeant purchased did not have a gun to their head and I'm sure they were fairly compensated when purchased. Who cares what Valeant does after the acquisition?

PascalsMugger 11y ago
It's one thing to buy a company and then do layoffs to realize efficiency gains, and another to buy a company essentially for its IP and fire everybody. Sure, it's "cost cutting" taken to its logical extreme. But it's also incredibly wasteful and disruptive. Valeant's was able to overpay for these companies because it was betting that its shady practices would allow it to realize outsize gains for the IP acquired, and that's turning out to be a bad bet. So not only have they gutted numerous companies, disrupting the lives of many researchers and others, but they are also now under a mountain of debt and have a bunch of husks of companies that aren't worth near what they were paid for. It's lose/lose/lose. The only people who made out are the ones who original owned the companies Valeant bought.
- refurb 11y ago
  The issue is that Valeant's business model of buying assets and firing everyone else except sales and marketing was/is pretty attractive to Wall Street. Pharma's return on R&D investment has been horrible, so when Pearson said "we don't do R&D", it got some people pretty excited. Regardless, that business model has been proven to be a poor strategy. Good drugs come from R&D. Can you snap up a bunch of "ok" drugs and sell them through shady techniques? Sure, but it catches up with you eventually. Take a look at their product line.[1] Jeeze. It's either branded medication that has no real use (since you can get products that are just as good for cheaper) or brand name drugs where the generic already exists. If either a doctor or insurance company was paying attention, none of those drugs would ever be used. Maybe I'm going overboard with that statement, but it's mostly true. Valeant never was a pharmaceutical company, it was a sales and marketing company for a bunch of low quality drugs. [1]http://www.valeant.com/operational-expertise/valeant-united-states http://www.valeant.com/operational-expertise/valeant-united-...
- hkmurakami 11y ago
  >It's one thing to buy a company and then do layoffs to realize efficiency gains, and another to buy a company essentially for its IP and fire everybody. Isn't that basically what Google did with Motorola?
  - eitally 11y ago
    No, not at all. Motorola Mobility was bleeding cash for years (basically since the end of life for the original Razor -- they didn't have any profitable phones again until the X & G). Yes, Google wanted their patent portfolio, but it's not like MMI was making money before the acquisition ... which was why even prior to the Google purchase Motorola had split into MMI & MSI, which is absolutely profitable selling radio gear & services.
eitally 11y ago
Sometimes they do sort of have a gun to their head. A lot of times these acquisitions are via hostile takeovers approved by a board of directors/shareholders against the will of senior leadership (much less the rank & file). Who cares what Valeant does after the acquisition? People care. When Pfizer purchased King Pharmaceuticals (you've probably never heard of King, but they patented the Epi-Pen epinephrine auto-injector), they got rid of about 450 of 550 employees, keeping only a few compliance & research folks along with the sales team. When Valeant purchased Salix (patent holder for Xifaxin, which is one of Valeant's only winners right now), they laid off about 800 of 1100 staff (again, keeping primarily the sales team). Valeant used about $11b in debt + Valeant stock (no cash) to purchase Salix. The debt has been downgraded to junk status and the stock has lost 90% of its value. Tell me this was good for anyone (even the Valeant side!).
- refurb 11y ago
  If it's hostile takeover, it's because the shareholders want to sell. Who care what management wants? They gave up the right to run the company independently when they sold shares to the public market.