Valeant Pharmaceuticals International is facing another challenge as the company's shares plummeted again for as much as 20 percent per share. The plunge was came after the U.S. Senate's Special Committee on Aging launched a bipartisan investigation into four pharmaceutical companies including Valeant.
For the first time in more than two years, Valeant's stock declined as low as $73.32 before recovering some ground. They were down 11 percent to $81.74 while on the TSX, the shares fell 16 per cent to $102, which is the company's lowest level since mid-2013. And if the decline continues, it will be the sixth trading day in six weeks with a fall-off of at least 10 percent. According to Financial Post, the company currently has a market value of about $28 billion, compared to over $80 billion in August.
Due to the drastic downturn of Valeant's shares, investors are struggling with the mounting challenges faced by the controversial drug manufacturer. But Valeant's board and the company's third-biggest investor Bill Ackman said he felt that CEO Michael Pearson was the right CEO for the company despite disagreeing with some of his decisions.
"We share the board's confidence in you and your leadership," Ackman, the billionaire hedge fund investor who runs Pershing Square Capital Management, said in a letter. "While I have strong views on Valeant's communication strategy and would have taken a different approach, you and the board should not interpret this as a negative reflection on my view of you as the CEO of the company."
"You are one of the most shareholder-oriented CEOs I know," Ackman wrote to Pearson in an email seen by Reuters. "You have assured me that you and the rest of the board are considering any and all alternatives that would benefit shareholders and other stakeholders."
Valeant spokeswoman Laurie Little said that Pearson has the board's "full confidence."
"Mike remains focused on running the business and has been meeting with physicians, partners and other stakeholders," Little said.
Meanwhile, Ackman's comments Thursday afternoon didn't save the Valeant Pharmaceuticals' declining shares. And to make matters worse, the company has been under pressure over its pricing practices and its relationship with Philidor Rx Services, a mail-order pharmacy that it cut ties with on Oct. 30. And on Wednesday, members of Congress said they want to investigate Valeant's pricing practices, Bloomberg Business reported.
Moreover, the Congress have asked Valeant for documents related to the heart drugs Nitropress and Isuprel, whose prices shot up by 212 percent and 525 percent the day the company acquired the rights to sell them. On Thursday, Democrats on the Ways and Means Committee called on the panel's Republicans to call a hearing on drug pricing.
Aside from Congress, the U.S. Senate's Special Committee on Aging has also requested the participation of Valeant and other drug companies such as Turing Pharmaceuticals, Retrophin (RTRX) and Rodelis Therapeutics in the investigation on pharmaceutical drug pricing, The Street has learned. A tentative hearing has been scheduled for December 9.
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