Oh how the mighty are falling...............
Valeant drug company got some bad news today.
Valeant bond investor Centerbridge notifies company of intention to call a default.
You may remember Valeant as having a history of buying up smaller drug companies ( a LOT of them) and then raising the prices of their drugs.
The company raised prices on all its brand name drugs 66% in 2015, five times more than its closest industry peer.
The cost of Valeant flucytosine is 10,000% higher in the United States than in Europe.
Valeant is known for buying companies and laying off their employees to achieve savings, while accumulating a debt of about $30 billion.
It spends an amount equivalent to only 3% of its sales on research and development, which it views as risky and inefficient compared with buying existing drugs. Traditional big drug companies spend 15 to 20% of sales on research and development.
Valeant also pays extremely low taxes because it is officially based in Canada, although Mr. Pearson operates from New Jersey."
Valeant's acquisition of Bausch & Lomb in 2013, and Paragon Vision Services in 2015, is alleged to have given the company control of over 80% of the production pipeline for hard contact lenses. A series of unilateral price increases beginning in Fall 2015 spurred the FTC's investigation.
Valeant is now being investigated by FTC, and 2 State's Attorney's offices.
And ts biggest bondholder, Centerbridge, is calling a default on Valeant bonds.
Sources:
https://en.wikipedia.org/wiki/Valeant_Pharmaceuticals
http://www.marketwatch.com/story/valeant-shares-plunge-on-report-debtor-has-called-default-2016-04-12
