Valeant CEO admits 'major miscalculation' in failed quest to nab Allergan

Valeant CEO J. Michael Pearson

Everyone makes mistakes--Valeant ($VRX) CEO J. Michael Pearson included. And he's perfectly willing to admit it.

After losing out on a months-long hostile pursuit of Allergan ($AGN)--which Actavis ($ACT) ultimately swooped in to snag for $66 billion--Pearson has ID'ed a couple of places he went wrong. Including one "major miscalculation."

"Part of our thesis was that no one else would come in," he told the Financial Times. "We were looking more at the bigger companies--like Johnson & Johnson, GlaxoSmithKline and Sanofi--and largely thinking they could pay all cash, which we couldn't.

"So when Actavis came in, I was naive and thought we had a better fit strategically--more synergies and a lower tax rate. But whenever there's an auction we are likely to lose, because we are so strict on price, so that was a major miscalculation."

Pearson also thinks Valeant did a "poor job" communicating its feelings on R&D--a misstep Allergan capitalized on. The Botox maker portrayed the Canadian pharma as a research-averse, budget-slashing, innovation-quashing barbarian. Now, Valeant is working hard to combat that rep and show its labs can produce; at last week's JP Morgan Healthcare Conference, Pearson highlighted organic growth forecasts of 10% to 12% and announced plans to plow marketing dollars into new launches.

Bill Ackman

And what of teaming up with activist investor Bill Ackman on the hostile bid? He was a "very good partner who kept his word," Pearson says, but don't expect to see the pair partner again in the future. "It's over," he told the FT.

That goes against the speculation brewing about a potential Valeant acquisition of animal health giant Zoetis ($ZTS)--a company in which Ackman snapped up a stake shortly before the conclusion of the Allergan saga. While Valeant is interested in buying its way into the animal health space, "we have no interaction or contact with them. I think it's highly unlikely anything is going to happen with Zoetis," Pearson said.

- read the FT story (reg. req.)

Special Report: The most influential people in biopharma today - J. Michael Pearson, Valeant

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