(Bloomberg) — Striking a more reflective tone and pledging to listen to critics, Valeant Pharmaceuticals International Inc. Chief Executive Officer Mike Pearson sought to regain confidence from investors in remarks that painted a fuller picture of the drugmaker’s financial exposure to a controversial pharmacy partner.
In his first public comments since Valeant said it would cut ties with Philidor Rx Services, Pearson warned that the impact of the decision would meaningfully affect the dermatology business, which makes up almost a fifth of total revenue. On a conference call Tuesday, he said the company was working to forge better relationships with insurers and to create a new program to ensure patients could get and afford the company’s products.
“The past few weeks have been a painful learning experience for me personally, and I know it has been painful for many of you as well,” Pearson said.
Concerns about Philidor and other business practices by Valeant, such as how it prices its drugs, have turned the drugmaker from one of the market’s top-performing stocks into one of its worst. From 2010, Valeant shares rose more than 10-fold to peak in August. Since then, they have lost 67 percent of their value, as of Monday’s close.
“One of the consequences of such rapid growth is that you don’t always take the time to listen to what the broader world outside your company is saying,” Pearson said. “This has been a mistake on our part as a company and on my part as its leader. We’re going to fix that.”
That message was more conciliatory than Pearson’s comments in an Oct. 26 call, when the CEO first sought to deny allegations that the company was inflating sales figures through its relationship with Philidor. On that earlier call, while he acknowledged being slow to answer investors’ questions, he also lashed out at stock commentary site Citron Research, which he accused of the equivalent of yelling “Fire!” in a crowded theater.
Investors remained skeptical Tuesday. The shares slid 3 percent to $82.85 in early trading, headed for their first decline in the past three trading days.
Pearson said he couldn’t comment on a board investigation into the relationship with Philidor, though he said the pharmacy’s executives have assured him they did nothing wrong. Former Philidor employees have alleged that the pharmacy altered some doctors’ orders to specify that they wanted brand-name drugs instead of generics, a way to get larger reimbursements for Valeant from health insurers. Philidor said that it only filled prescriptions with medications that doctors and patients requested. Weeks before Valeant said it would cut ties with Philidor, the drugmaker was planning to expand the relationship, Bloomberg has reported.