MONTREAL - Pharmaceutical company Valeant is expected to make cuts at newly acquired Bausch + Lomb without hurting the eye care company's "muscle," chief executive Michael Pearson said Thursday, after the Quebec company recorded a third-quarter net loss of $973 million.
Valeant said the loss amounted to $2.92 per share, partly due to the restructuring costs and a settlement in a dispute with California-based Anacor Pharmaceuticals,
Pearson said he has visited Bausch + Lomb operations in countries such as the United States, United Kingdom, Germany, France, China and Japan.
"I'm excited about the opportunity to stream costs and to trim the fat without touching the muscle," he told analysts on a conference call.
In late July, Valeant said that it will eliminate as much as 15 per cent of its workforce and move Bausch + Lomb's headquarters to New Jersey as part of its US$8.7 billion acquisition of the company.
In a letter to its own and Bausch + Lomb workers, Valeant said that after the deal closes, it will eliminate between 10 per cent and 15 per cent of positions company wide. That works out to between 1,850 and 2,775 people and was expected to include both Valeant and Bausch + Lomb workers.
The acquisition of Bausch + Lomb, one of the world's best-known makers of contact lenses, marked a massive expansion of Valeant's own smaller ophthalmology business.
Pearson said the restructuring charge related to the Bausch + Lomb acquisition amounted to more than $300 million. There was also a one-time impairment charge of $645 million related to a decision by GlaxoSmithKline to stop marketing and sales support of an epilepsy drug in the U.S.
Valeant (TSX:VRX) announced earlier this week that it has agreed to pay $142.5 million to settle all outstanding disputes with California-based Anacor Pharmaceuticals, which Pearson said also impacted earnings.
The payment includes a previously announced $100-million arbitration award to Anacor (Nasdaq:ANAC), relating to a breach of services provided by Dow Pharmaceutical Sciences Inc. before it was bought by Valeant. Anacor has said the settlement also resolves its ongoing dispute with Medicis Pharmaceutical Corp., which Valeant acquired last December.
Adjusted income for the quarter was $486 million, or $1.43 per diluted share, an increase of 24 per cent over the prior year.
Revenues in the third quarter were $1.54 billion, up 74 per cent from the same quarter last year.
Pearson noted that Valeant's operations in emerging markets delivered growth of 14 per cent in the quarter, helped by Poland and Russia and a lso by southeast Asia. Latin America and Africa.
In emerging markets, Pearson said branded generic drugs and over-the-counter products are doing well and are increasingly paid in cash by consumers. He said his company wants to avoid being dependent on reimbursements from governments for drugs.
"It makes us more susceptible to economic cycles but obviously less susceptible to government intervention."
Valeant's prescription medicines include treatments for skin conditions, weight loss, vitamin deficiency, certain herpes viruses and antibiotics, as well as the treatment of major depressive disorder, hypertension and angina, and cardiovascular and neurological diseases.
Its over-the-counter, non-prescription products include remedy Cold-FX and skin product Dermaglow. The company's branded generics cover a broad range of treatments including antibiotics and anti fungal medications.
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