Allergan attacks Valeant outright
Wednesday, May 28 2014 | 00 h 00 min | News
In a document filed with the U.S. Securities and Exchange Commission, Allergan has launched an all-out attack on Valeant, the Canadian pharmaceutical company that is trying to acquire it.
Written by consultants, the document challenges Valeant’s business model. Allergan starts by raising concerns about Valeant’s real organic growth, which it estimates at -0.5% in 2013 and -1.4% in the first quarter of 2014.
Allergan also claims that Valeant’s recent acquisitions have shown poor performance. The document states that Bausch + Lomb reported erosion in units sold for three out of four of its largest products, leading to losses for which Valeant compensated with list price increases.
Allergan questions Valeant’s ability to manage a company of Allergan’s scale, due to its “limited experience with large, global scale products” and the stability of its management team and accounting practices.
Finally, the document attacks the inherent value of Valeant’s business model, which is based on serial acquisitions and cost cutting. In the specific case of Allergan, analysts doubt that Valeant will be able to cut operating costs by $3 billion without harming Allergan’s long-term viability.