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Pharma CEO Who Said He Only Cares About Shareholders Loses Them Money

Following a trail blazed by notorious Turing Pharmaceuticals CEO Martin Shkreli, Valeant Pharmaceutical CEO J. Michael Pearson let it be known that his company’s shareholders, not patients needing the company’s drugs, were his only real concern.

Valeant has been acquiring drugs and raising their prices to a odious degree. In one case, the company raised the price on a gastrointestinal drug, Zegerid, by 550%. When confronted on the company’s business practices in an interview with CNBC, Pearson proudly chirped “My primary responsibility is to Valeant shareholders. We can do anything we want to do. We will continue to make acquisitions, we will continue to move forward”.

Sadly for Pearson, he is not even pulling off the corporate sociopath act well, because Valeant’s shareholders are getting hammered.

Valeant Pharmaceutical’s stock plunged after allegations surfaced that the firm was using “phantom accounts” to deceive auditors about its actual value. The charges come from a legally-questionable network of specialty pharmacies that are estimated to count for as much as 10% of Valeant’s revenue.

One of those specialty pharmacies, Philidor Rx Services, was denied a license in California for making false statements. The specialty pharmacy problem combined with news reports about the company being subpoenaed by Congress and the US Attorney of Massachusetts for its pricing practices, has led to Wall Street analysts downgrading Valeant’s stock and shortsellers cashing in.

While much of the negative press coverage Valeant has received is for its brutal pricing strategy, a report by the Southern Investigative Reporting Foundation (SIRF) revealed the details of a lawsuit by R&O Pharmacy for receiving improper demands for payment from Valeant of $69.8 million. Contrary to Valeants claims, R&O Pharmacy said it owes Valeant nothing.

But the lawsuit reported by SIRF could just be the beginning of another wave of damaging stories. Yesterday, ProPublica published a report claiming that people affiliated with Valeant Pharmaceuticals have invested in other pharmaceutical companies already located in California in what may be an attempt to bypass the California license denial decision. More bad news to make investors run for the hills.

Valeant Pharmaceutical’s stock is down 40% since last week. If Mr. Pearson is, as he claims, only in the pharmaceutical business to make his shareholder’s money, he is a miserable failure by his own measure.

Dan Wright

Dan Wright

Daniel Wright is a longtime blogger and currently writes for Shadowproof. He lives in New Jersey, by choice.