Amid pricing controversy, Valeant shifts business strategy to more R&D

Clearly burnt by recent accusations that Valeant Pharmaceuticals is price gouging, its CEO announced that the Canadian company will shift away from M&A activity and focus more on R&D.

The recent drug pricing controversies have taken their toll on Valeant Pharmaceuticals’ business plan: It’s shifting its strategy away from dealmaking toward a stronger emphasis on research, CEO Michael Pearson said in its third quarter earnings call.

The company has built its fortune on acquiring drugs and selling them at a premium – but this plan has begun to backfire, it appears, and the company’s now looking to swell its internal pipeline of drugs.

“Given the evolution of our product mix, coupled with the recent events, it is likely that we will pursue fewer, if any, transactions that are focused on mispriced products,” Pearson said.

Specifically: The Canadian company’s been criticized of late for hiking up its drug prices, and is being investigated by the U.S. government for its pricing, distribution and patient assistance practices. Specifically, the Wall Street Journal found in April that the company – and several others – buy rival drugs and then significantly bump up their prices.

However, Valeant’s foibles shot to the spotlight soon after Turing Pharmaceuticals CEO Martin Shkreli incited the nation’s ire for his egregious pricing of generic drug Daraprim.

“The pharmaceutical industry is being aggressively sort of attacked for past pricing actions,” Pearson said. “I do think, given that environment, the pricing that pharmaceutical companies will take in the future will be more modest.”

Valeant’s earnings reveal caused its stock to plummet 9.2 percent, down to $161.22 in afternoon trading – though analysts still say these results were better than expected.

Screenshot via The National YouTube station