Valeant Pharmaceuticals (VRX) is doing all it can to rebrand itself as a patient-first drugmaker with a new set of leaders at the helm.
But on Thursday, its efforts were frustrated on two fronts: A report circulated that Valeant is failing to come through for at least one prominent customer on its promise to cut prices of essential drugs from exorbitant levels, and Valeant's new CEO, Joseph Papa, was undermined on a conference call by his former employer Perrigo (PRGO).
Valeant shares are down more than 90% since highs last August, in part because it came under fire from politicians and the media for hiking prices of necessary drugs to unreasonable levels, generally after the acquisition of a new product. The practice -- which Democratic presidential contender Hillary Clinton has equated to "gouging" patients with "predatory pricing" -- culminated with an apology last month from Valeant's departing CEO, Michael Pearson, to the Senate Special Committee on Aging.
But the drugmaker's renewed effort to re-establish trust among investors was handed a setback on Thursday after a New York Times report found that the Cleveland Clinic, one of the country's pre-eminent hospitals for cardiac care, has yet to receive 30% discounts it asserts it was promised for Valeant's expensive heart medications.
"It will take time for Valeant to regain its stakeholders' trust," billionaire activist Bill Ackman said in his Pershing Square hedge fund's letter to shareholders Wednesday, after Valeant proved to be the primary culprit in Pershing's 25% loss before accounting for fees in the first quarter. "We believe that this will occur over time as the company delivers several new quarters of results and continues to fulfill its commitments to shareholders, patients, doctors, and the community at large."
Meanwhile, John Hendrickson, Perrigo's president who recently was named the Irish drugmaker's CEO, replacing Papa, said on a Thursday conference call with analysts that Perrigo's "record of performance against our own expectations is unacceptable."
Perrigo's chairman, Mary Brlas, attributed much of Perrigo's success over the past few years to Hendrickson's guidance, both during his brief tenure as president and his years as a leader in global operations. "John led and shaped the operational backbone of the organization," she said.
Hendrickson stepped in as president of Perrigo last October after serving eight years as vice president of global supply chains and operations. He was named CEO after Valeant's announcement last month that Papa would be replacing Pearson as CEO of Valeant.
Valeant shares are down 75% on the year as of the close of trading Thursday.