MONTREAL – Valeant’s second-largest shareholder expects the embattled drugmaker will address concerns that spurred an investor panic and dramatic shareholder sell-off when it provides an operational update Tuesday.
The comment from Pershing Square Capital — which has seen its investment portfolio dragged down by a huge drop in Valeant’s share price — came after Valeant Pharmaceuticals International (TSX:VRX) said it will provide an overview of its plans and priorities, including the transition to new specialty pharmaceuticals after severing ties with Philidor Rx Services, a U.S. mail-order pharmacy.
The Quebec-based pharmaceutical company said its conference call Tuesday will be followed by an investor day and an updated outlook by year-end. Company officials will also appear Dec. 9 at a U.S. Senate committee hearing that is examining allegations of price gouging by drug companies, including Valeant.
“I think each of these events will be a confidence-inspiring event for the shareholders of the company,” Bill Ackman, CEO and founder of Pershing Square Capital, said Monday during a conference call.
The New York-based fund manager has made a huge bet on Valeant by devoting about 12 per cent of its portfolio on Valeant.
Valeant’s (TSX:VRX) shares are down about 70 per cent since they peaked in August at C$347.84. Since then, the company has been hit by negative publicity from U.S. investigations into its drug-pricing policy and a report from short-seller Citron Research that opened up the company to questions about some of its business practices, particularly its relationship with Philidor.
Ackman said again Monday — as he has in the past — that Valeant has done a poor job in managing public relations.
“The fact they are holding a call tomorrow is a very positive step in the right direction,” Ackman said in a two-hour call to discuss Pershing Square’s own investments.
Ackman said he expects Valeant will soon identify a new specialty pharmaceuticals channel for about US$800 million of its product. He said he assumes Valeant has contacted several stand-alone companies or large divisions of major firms that can replace Philidor and continue to deliver products outside the traditional retail pharmacy system.
Political scrutiny will make drug companies more sensitive about dramatically increasing prices, but Ackman said he doesn’t believe Valeant needs to be aggressive about prices to be an attractive investment.
Follow @RossMarowits on Twitter.