Valeant Pharmaceuticals Intl Inc. (NYSE: VRX) slumped 9.59% to $30.16 on Monday morning after Warren Buffett said the company’s practices were flawed.
“The business model of Valeant was enormously flawed,” Buffett, 85, said about the embattled drugmaker Saturday at Berkshire’s annual shareholder meeting in Omaha, Nebraska. “I watched the Senate hearings a couple days ago when Senator Collins and Senator McCaskill interrogated three people from Valeant, and it was not a pretty picture.”
Valeant Pharmaceuticals has endured months of turmoil as it became the face of price increases on drugs in the U.S., attracting scrutiny from regulators and politicians. Since its August 2015 peak price of $262.52, Valeant has lost over 85% of its stock market value, failed to file its annual report before due date and said it is being investigated by the Securities and Exchange Commission.
Current and former Valeant Pharmaceuticals officials were grilled by Congress last week over the company's strategy of takeover older medicines with limited competition and then pushing up their prices many times above previous levels.
Berkshire Vice Chairman Charles Munger has criticized Valeant’s practices, drawing return fire from activist investor Bill Ackman, whose Pershing Square Capital Management is one of the biggest shareholders in the drugmaker.
“Valeant of course is a sewer, and those who created it deserve all the opprobrium that they got,” Charles Munger said at Saturday’s annual meeting.