Back in its serially acquisitive heyday—you know, like, last year—Valeant Pharmaceuticals bought what looked to be a sure thing: Viagra for women. Valeant scooped up the female libido pill Addyi’s maker, Sprout Pharmaceuticals, for $1 billion, which was a bargain, since Valeant expected the drug to be making it $1 billion per year by next year. It isn’t.
Sales of Addyi may total less than $10 million this year, far short of the $1 billion targeted by next July, and as a result shortchange Sprout investors out of millions of dollars of royalties, the complaint said.
About that complaint: Since the Sprout deal, like many pharma deals, gives the old company’s investors a share of future profits, former Sprout shareholders were rather eagerly awaiting those billions to start rolling in. The only problem, it seems, is the second part of Valeant’s strategy: Jack up the prices of the drugs it buys.
According to a complaint filed on Wednesday in Delaware Chancery Court, Valeant neglected its contractual obligations to market Addyi, sometimes dubbed “the female Viagra,” and priced it at $800 per month, twice as high as the market could bear.
This led to poor sales, in part because insurers and pharmacy benefit managers refused to cover the pill at the “inflated” price, and made Addyi unaffordable for millions of women facing an “unmet medical need,” the complaint said….
The complaint seeks unspecified damages and a requirement that Valeant live up to the merger agreement by hiring a 150-member sales force for Addyi and spending at least $200 million on marketing, research and development.
Ha. Like Valeant has $200 million for things other than debt service. Which brings us to the next phase of the company’s life: Serial seller. Next to go after its agita business is Bausch & Lomb’s eye-surgery business, which Valeant has owned for a relatively long time, at least by its standards—all of three years.
The eye-surgery business, which Valeant acquired with its purchase of Bausch & Lomb just three years ago, could fetch as much as $2.5 billion in a sale, according to people familiar with the matter. It’s not clear who may be interested in the operation. The sales process is in an early stage and Valeant may still decide not to sell the business, some of the people said.