Valeant Pharmaceuticals (NYSE: VRX) International is set to welcome back CEO Michael Pearson after he returns from medical leave. However, some changes are in the works for the Chairman and CEO who had made headlines for his controversial but effective breakthrough strategies.
Role to be split, Robert A. Ingram to be new Chairman
However, to address growing investor concerns on overly relying on just one person, Valeant has said that it intends to divide the two roles with Robert A. Ingram taking on the role of Chairman, while Pearson will continue as CEO. This was perhaps also in part due to the sometimes controversial moves the one-time management consultant made to give results shareholders wanted. Pearson laid a heavy emphasis on sales and pricing, some believe at the cost of focussing on drug discovery.
Making a statement on this announcement Ingram said that Pearson’s medical leave and illness underlined the need for succession planning at Valeant. The 56 year old had experienced a severe bout of pneumonia, forcing him to go on medical leave. This was in the wake of a difficult period for Valeant.
Ingram also expressed happiness at Pearson’s return and lauded his exemplary efforts during his eight years at the helm.
Not all smooth sailing at Valeant
Valeant faced a rocky patch last year when it came under scrutiny for drug pricing as well as other issues including its accounting practices. Only last week, the firm made an announcement that it may need to revisit its past financial statement as it has uncovered a possible accounting error. As such, a discussion of fourth quarter financials on a scheduled conference call has been postponed.
Another potential problem has reared its head in the form of plans by competitor AllerganPLC to launch a generic version of Valeant’s prize inflammatory-bowel drug Xifaxan which is slated to bring in over a billion dollars in sales each year. Valeant had gained control of the drug and its patents as part of a USD 11.1 billion deal when it acquired Salix Pharmaceuticals. Pearson is confident that Valeant will be able to protect its interests with the patents.
The Canadian drug company believes that Person's leadership is needed to help the company bounce back from its currently waning stock prices, by rebuilding investor confidence. While Pearson’s approach has been anything but conventional, board members welcome his return. Pearson has said his focus will be on improving and deepening ties with both regulators as well as customers. Overall, he felt there was a need for Valeant to improve its reporting procedures, as well as internal controls and transparency.