When Valeant ($VRX) made the quick decision to terminate its relationship with specialty pharmacy Philidor--embroiled in questions about its business practices after allegations that the drugmaker used it to inflate its top line--it had lots to do, and fast.
But one thing quickly rose to the top of its list: Hang on to its reps. And now it's patting itself on the back for that decision.
As the company outlined to investors on a conference call last week, it put in a retention program for its key sales and marketing staff--and as a result, its ranks are the same as they were before things got rocky for the Canadian drugmaker.
All of that happened amid a quick tour of face-to-face meetings--sales and marketing leaders did customer outreach in 20 cities in 6 weeks--to reassure dermatologists and podiatrists that Valeant was still committed to its business. The team was also working out a new distribution agreement with Walgreens ($WBA) to fill the hole Philidor left.
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| Valeant CEO J. Michael Pearson |
"We've lost no one," CEO J. Michael Pearson said on the call. "We lost two reps in dermatology. That's it."
As a result, the company now has 350 reps "who are ready and waiting," Deb Jorn, Valeant's EVP of dermatology and GI, told shareholders. "We know how to launch products. We know how to maintain growth of our inline brands," she said.
Valeant needs its reps to keep it up if it wants to right the ship in dermatology, the space hit hardest by the collapse of the Philidor arrangement. It's said its fourth-quarter business would be impacted by the split, and last week, it acknowledged that the $225 million it plans to spend to ramp up skincare product access will take a bit out of earnings in 2016.
But it'll be paying for that retention plan, too. Those bonuses will lop $75 million off of earnings next year, bringing the company's EBITDA forecast to between $6.9 billion and $7.1 billion--down from the $7.5 billion it previously predicted.
- see Valeant's presentation
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