MONTREAL – Valeant Pharmaceuticals has turned to a drug industry veteran with more than three decades of experience to overhaul the embattled company and restore investor confidence.
Joseph Papa, who was chairman and CEO of Irish drug company Perrigo, is expected to join Valeant early next month as chairman and chief executive, the Quebec-based firm said Monday.
“We have an opportunity to move forward with a renewed focus on operating with integrity across all areas of the business and providing customers with safe and affordable products that improve their lives,” he said in a statement.
Papa, 60, had been CEO of Perrigo since 2006 and chairman since 2007. He resigned on Sunday.
His appointment comes at a critical time for Valeant (TSX:VRX).
The company announced last month that chief executive Michael Pearson was leaving after eight years at the helm. He is scheduled to testify to a U.S. Senate committee on Wednesday about drug pricing.
Once one of Canada’s most valuable companies following years of acquisitions, Valeant has seen its shares plunge amid controversies over soaring drug costs and its relationship with U.S. mail-order pharmacy Philidor.
Valeant chairman Robert Ingram said Papa has experience in leading companies through times of transition.
“In addition, fostering an ethical culture and creating opportunities for professional development have always been high priorities for Joe, and we look forward to Joe’s arrival at Valeant,” Ingram said.
Neil Maruoka of Canaccord Genuity said he’s hopeful that Papa will bring much-needed stability at the top following Pearson’s “tumultuous tenure.”
“We expect that the addition of Mr. Papa is likely to bring an entirely different tone to the organization with less of an emphasis of growth through acquisition and more of a focus on solidifying the base businesses and rebuilding relationships,” he wrote in a report.
Vicki Bryan, an analyst with corporate bond research company Gimme Credit, said she has doubts about the quality of Valeant’s products and its operating performance potential even under new management.
While Perrigo and Valeant have both grown through acquisitions and keeping a lid on research and development costs, she said in a note to clients that Perrigo has maintained comparatively low debt and its financial numbers are transparent without “questionable” acquisition-related charges,
Before joining Perrigo, Papa was chairman and chief executive of the pharmaceutical and technologies services segment of Cardinal Health Inc. He also served as president and chief operating officer of Watson Pharmaceuticals Inc.
Valeant said earlier this year that it had to restate its financial results for 2014 and 2015 after discovering that about US$58 million of sales were recognized at the wrong time. It hopes to submit its restated financial statements for 2015 to regulators by Friday.
Note to readers: This is a corrected story. A previous version said Perrigo was a U.S. drug company, and while it has operations in the U.S., it is headquartered in Ireland.