Valeant investors fret as new Perrigo CEO slams Papa's performance

Valeant CEO Joseph Papa’s successor at former company Perrigo is making it known that he isn’t too happy with the state in which Papa left things there. And that has Valeant investors worried.

John Hendrickson, the new skipper at the Irish drugmaker, told analysts on a conference call Tuesday that Perrigo’s “recent track record of performance against our own expectations is unacceptable.” He also stressed that he wants “the expectations we lay out to be realistic, numbers we feel we can deliver.”

Perrigo has already made it pretty clear that it couldn’t deliver numbers Papa laid out to begin the year. The day the Dublin pharma announced his departure and Hendrickson’s appointment, it also slashed its full-year earnings guidance.

In recent years, Papa has been credited with successfully building up Perrigo, and he netted a hefty bonus for fighting off an unwanted takeover attempt from Mylan. Lately, though, the drugmaker has struggled, in part because of the underperformance of recent acquisition Omega Pharma.

”Basically Joe Papa just high-tailed it out of Perrigo, and kind of left the company in shambles,” Piper Jaffray analyst David Amsellem told Bloomberg.

And guidance slashing isn’t something Valeant investors want to see any more of. Earlier this year, a disastrous conference call on which then-CEO J. Michael Pearson laid out lower-than-expected sales for multiple key franchises and revised guidance downward--twice--lopped off half the value of shares. They fled for the exits once again Tuesday, sending shares down to their lowest close since November 2010.

Valeant, for its part, has been working to paint Papa as a skipper who can engineer a turnaround after months fraught with channel-stuffing allegations, debt-default worries and political pricing pressure. He’s already gotten to work resolving the latter, setting up an internal committee to oversee the Canadian pharma’s pricing decisions.

So far, though, that committee hasn’t done much to placate hospitals, which aren’t seeing the discounts of up to 30% that Valeant promised they’d get on a pair of jacked-up heart meds. But Valeant says that’s going to change.

“The Patient Access and Pricing Committee we formed last week is working to identify those gaps as well as develop solutions so any hospital that is eligible for discounts on Nitropress and Isuprel receives them,” it said in a statement.

- read the call transcript

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Special Report: The most influential people in biopharma today - 2016 - J. Michael Pearson - Valeant

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