Valeant targets $200M in post-merger cost cuts

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Whether Valeant Pharmaceuticals' ($VRX) latest news is good or bad depends upon your point of view. If you're an investor or analyst, it's good: The company forecast estimate-beating earnings and in-line sales for the coming year.

But if you're an employee--particularly an employee in a "redundant" department--the news might not be so good. One reason for the higher-than-expected earnings forecast is the company's pledge to find $200 million in costs to cut this year, as it absorbs the companies it bought over the past 12 months-plus. That's on top of the $320 million saved last year, thanks to the Biovail merger that created the company in fall 2010.

Valeant says it shut down 11 facilities as part of that $320 million in cost-cutting, and it tagged 1,100 jobs for shedding. It's not now saying how many jobs the additional cuts could claim. The recent buyouts--including iNova in a $714 million deal and Sanofi's Dermik unit for $425 million--created some overlap, as mergers tend to do. Valeant says it expects to save $75 million in Europe via its acquisition of PharmaSwiss, plus $85 million in the U.S. via its buyout of Dermik and Janssen's Ortho Dermatologics division, plus $25 million in Australia and $15 million in Canada.

And if CEO Michael Pearson has his way, more overlap-creating deals are likely on their way. Pearson's modus operandi is growth via acquisition--he's not interested in developing drugs, only selling them--and he's always on the lookout for more. Valeant will "continue to buy companies at reasonable prices and see disproportionate returns from those," he said (as quoted by Canadian Business), adding that it's the "reasonable price" bit of that strategy that's a challenge.

- read the Canadian Business story

ALSO: Valeant Pharmaceuticals CEO Michael Pearson said no agreement has yet been reached in its $327 million hostile bid for Ista Pharmaceuticals. Report

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