Analyst: Valeant better bring back Pearson if it wants to stay in the game

J. Michael Pearson

Valeant's ($VRX) board may be weighing whether pneumonia-stricken CEO J. Michael Pearson is ready to return to work. But he'd better return eventually, one analyst says--or the company could find itself in a world of hurt.

The way Nomura's Shibani Malhotra sees it, the board "may not be comfortable with Pearson returning to the helm." But if they replace him, the "loss of Pearson as a leader may remove much of the company's competitive advantage," she wrote to clients Thursday.

In that scenario, Valeant would "ideally need to replace him with an outsider with extensive pharmaceutical experience," she believes--a description current interim CEO Howard Schiller, a former CFO at the company, doesn't match. And if Valeant can't come up with an outsider pharma vet? "We think the board could choose a more drastic approach and consider selling all or parts of the company," she wrote.

Thursday, sources told CNBC that Pearson--who went on medical leave Dec. 28--was ready to return to work, but that Valeant's board was debating whether he should. The report followed Valeant's announcement from earlier this week that it would restate earnings after an ad hoc committee found $58 million in accounting mistakes related to controversial specialty pharmacy Philidor.

Questions around Pearson's employment have been swirling since the Philidor drama was in full swing, with a short-seller in October accusing the drugmaker of using the pharmacy to inflate its top line. Those accusations, along with the price-hike uproar that enveloped the drugmaker as Congress demanded justification over increases on Valeant's heart meds, sent shares--at their all-time high over the summer--into turmoil.

Through it all, though, Valeant has stood by its skipper. "Mike remains focused on running the business," Valeant told Bloomberg in November. "Valeant's core business remains strong and is well positioned for growth."

Special Report: The most influential people in biopharma today - 2014 - J. Michael Pearson - Valeant

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