As the company's situation looks dire, Valeant Pharmaceuticals asked CFO Howard Schiller to step down. The Canadian drugmaker also planned to replace CEO Michael Pearson and inviting activist investor Bill Ackman on board.
Michael Pearson has been leading the Canadian drugmaker since 2008. He was the icon of successful strategy Valeant had taken in the series of takeover. However, after a failed hostile takeover of rival company Allergan in 2014, all things began to fall apart.
Valeant has been known for its strategies to buy other companies, slash costs and hike prices on undervalued drugs. CEO Michael Pearson was the man behind all those strategies, thus making the company an investor's favorite for years. Now both Pearson and his strategy has met a dead end, as Valeant announced on Monday to let Michael Pearson stepping down from his position.
Following a series of takeover which spanned for years, the company now has no more money left for the acquisition. Its strategy to hike drug price has sparked public outrage that led United States Congress to summon the company's executives for investigation. Valeant was also under investigation by any other U.S. agencies including the Securities and Exchange Commission.
On Monday, trading of Valeant stock in the New York Stock Exchange was halted, pending an announcement from the company. The company's share has nosedived 90% from its highest position in August last year. In order to save the company, analysts suggested to sell parts of the company which has been built by Mr. Pearson
Along with firing CEO Michael Pearson, the company on Monday also announced to have activist investor Bill Ackman in the board. Valeant has also asked CFO Howard Schiller to step down for "improper conduct" that lead to accounting issues. According to Reuters Howard Schiller denied the accusation.
Nasdaq reported that Mr. Schiller said in a statement, "At no time did I engage in any improper conduct that relates to any restatement of revenue the company is considering." He added that he relied on an an "incredibly experienced" finance executive whose treatment of the revenue in question was approved by external auditors.
Although Valeant blamed CEO and CFO, but the company said problems in accounting were rooted in broader cultural issues. The company's performance-based environment which put a challenging targets to be achieved as key performance indicators may have contributed to improper financial reporting.
Nevertheless, Valeant is certain to get better under new leadership. Chairman of the board Robert Ingram in a statement as quoted by New York Times said, "I am confident that the company will be able to rebuild its reputation and thrive under new leadership."
Valeant Phamaceuticals will replace its two executives, CFO Howard Schiller and CEO Michael Pearson. The Canadian drugmaker pointed the fingers on those individuals for improper conduct that lead to accounting issues.
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