Valeant CEO defends price hikes, business model in letter to worried employees

Sure, Valeant has raised prices--and a lot, on some drugs. But employees shouldn't worry about it, despite the recent price-hike backlash plaguing the industry and its stock prices.

J. Michael Pearson

That's the read from CEO J. Michael Pearson, who issued a letter on Monday to Valeant ($VRX) workers explaining that revenues from Isuprel and Nitropress--two products that saw their prices soar after his company picked them up--aren't part of the Canadian pharma's growth stats.

On top of that, the portfolio that houses those two meds should only account for 10% of business next year, he noted--and it's "becoming a smaller part of our portfolio over time."

The assertion comes as a response to employee questions about the company's "significant drop in our stock price"--especially recently, when a 5000% sticker-raising from Martin Shkreli's Turing Pharma provoked a vow from presidential candidate Hillary Clinton to impose limits on pharma's pricing free-for-all. Media coverage of the pricing debate has included numbers on Valeant's Isuprel and Nitropress hikes, which raised the price of Isuprel 525% and Nitropress 212%.

"Valeant is well-positioned for strong organic growth, even assuming little to no price increases," Pearson promised. The company's "core operating principles include a focus on volume growth and a concentration on private and cash pay markets that avoid government reimbursement in the U.S. and across the world."

This is certainly not the first time Valeant has faced criticism for its business model; last year's months-long pursuit of Allergan ($AGN) featured plenty of that, with one Morgan Stanley staffer referring to Pearson's company as a "house of cards."

And the company has already taken plenty of heat over the Isuprel and Nitropress moves, too. Last month, two lawmakers--including presidential candidate Sen. Bernie Sanders (D-VT)--sent a letter to Pearson asking him to explain just why the drugmaker had jacked up their list prices immediately after buying the brands. 

- read Pearson's letter

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