Valeant Pharmaceuticals chief executive Joe Papa says the drugmaker, which also owns Waterford’s Bausch + Lomb, has slimmed down enough for now and will focus on generating cash from its remaining businesses as it pays down a mountain of debt.
“We’ve accomplished what we felt needed to be accomplished, certainly in the near term,” said Mr Papa. “Our focus is going to be on the execution of the business.”
Since taking over in May last year, Mr Papa has sold or agreed to sell a cancer product, a skincare unit, and a number of other assets to help beat its goal of paying off $5bn (€4.23bn) of debt.
The sales have staved off the threat of default, and after they’re completed should leave Valeant with about $26bn-$27bn in debt, said Mr Papa, none of it due until at least 2020.
Mr Papa said that ideally, the company will use cash from its business operations to make future debt payments. The company’s second-quarter earnings showed signs that the drugmaker may start generating the means to do so. Sales of its biggest drug, Xifaxan, grew 17% in the quarter from a year ago, offsetting declining sales elsewhere.
Last month, Mr Papa said that a recent expansion at the Waterford plant, which employs 300 people, will help it meet global demand for its contact lenses.
Valeant shares rose 9% at one stage in New York. The shares hit a more than five-year low in April, but have since rebounded by more than 80%. There are still challenges. Its dermatology division has fallen short as it moved away from using a network of closely tied pharmacies.
“We’ve put in place the right team, we right-sized the operating expense structure for the business, and we’ve invested in improved sales support systems and market access,” said chief financial officer Paul Herendeen.
“What we need to do from here forward is demonstrate that we can get derm back to a growth trajectory.”
On a call with analysts, Mr Papa called the company’s Salix unit, which sells Xifaxan, a “standout”. He credited the drug’s success to putting more resources behind its sales force.
Valeant has been working to win back investors with a new management team following a spate of scandals involving its distribution network and controversies around high prices it put on old drugs.
The company maintained its profit projection for the year, despite selling some units, including a cancer business that made its second-biggest drug. Earnings before interest, tax, depreciation, and amortisation will be $3.6bn to $3.75bn. It cut its sales projection to $8.7bn.
Bloomberg and Irish Examiner
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