The Quintessential Specialty Pharma, Valeant Embodies PE Tenets
Even as private equity firms reach into specialty pharma niche opportunities for deals, specialty pharma companies are evolving, as well. Valeant Pharmaceuticals is a very visible example of one kind of specialty pharma model, which is based as much upon sophisticated financial engineering as product growth.
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Biopharma offers the best PE returns of any health care sector, but represents only about a third of private equity investment in health care as investors remain wary of high-risk R&D and tend to focus on easier targets, which are in limited supply. As the low-hanging fruit disappears, PE investors are looking at new approaches beyond outright purchases and sorting out opportunities in emerging markets.
The fast-growing, Canadian specialty pharma will shed thousands of jobs as it absorbs Bausch & Lomb, as part of an endeavor to save $800 million. CEO Mike Pearson’s note to employees describes a new organizational philosophy, with restructured management and business units.
Valeant's price-conscious, opportunistic approach to business development and relentless pace of activity has enabled it to quadruple sales in three years and grow its top-line 7% in 2010.