Valeant Pharmaceuticals
Arif Mitha
Management 2130 – 007
March 30, 2016
Donovan Lawrence

Valeant Pharmaceuticals
Pharmaceutical companies committing unethical business practices is so common place in society now that is can be considered a cliché. Companies like Valeant, Turning and even Johnson and Johnson, have all been in the news over unethical business practices whether they be price gouging, monopolization or product misrepresentation; each of these circumstances has caused an uproar from consumers and even federal government agencies are now beginning to investigate these companies for wrong doing. Valeant Pharmaceuticals is the most recent perpetrator of predatory pricing; on February 10, 2015 Valeant purchased the rights to a pair of life saving heart drugs Nitropress and Isurprel, on that same day the price rose 525% and 212% respectively (Rockoff & Silverman. 2015, p.1).
Internal and External Environment
When a company makes a decision like this, many internal and external factors much be evaluated before deciding to push forward.
P.E.S.T.L.E. Analysis
The relevant external factors affecting this industry are primarily the Political, Economic, and Legal forces. Political | * Hiliary Clinton attacking Valeant for predatory pricing. * Testifying in front of Congress for the severe price hikes of Nitropress and Isuprel * Potential loss of $300 million a year if congress forces Valeant to revert to original prices | Economical | * “Duty is to maximize profit of all products “(Rockoff & Silverman, 2015, p.3) * Company had a net debt of $30 billion, which fueled their serial acquisitions of patents (Dumortier, 2016, p. 5) * Increased pressure from shareholders to generate higher profits | Legal | * Numerous lawsuits * |

S.W.O.T. Analysis Strengths | * Employs over 18,000 people worldwide * Known as a specialist in the fields of Neurology and Dermatology * Manufacturing locations around the world * Strong presence in North America markets (Valeant Pharma SWOT analysis, 2014, p. 1) | Weakness | * Net debt of $30 billion dollars * Poor R&D investment | Opportunities | * Increasing population with heart problems * Acquisitions of already established products | Threats | * Risk of “Generic” brands being produced due to high cost * Changes to U.S. healthcare regulations as a result of recent predatory pricing attempts |

Focal Issue Valeant’s move to increase prices far beyond the reasonable grasp of patients is more than just the lust for profit; the bigger underlying issue that affects Valeant and indeed all pharmaceutical companies today is a question of ethics. Companies of this size are accountable to their shareholders first and foremost, as stated by Valeant representative Laurie Little “Our duty is to our shareholders and to maximize the value” of the products that Valeant sells, “Sometimes pricing comes into it, sometimes volume comes into it.” (Rockoff & Silverman, 2015, p.3). This mindset is what has driven many of these managers to sweep aside the moral and ethical duty to provide affordable care for patients for the pursuit of power and profit. To fix the unethical practices currently being seen there will have to be a complete overhaul of the company’s structure, vision and mission statements.

Analysis of Issue
Valeant’s descent into the depths of public hatred and contempt was not done in a single decision; while their choice to price gouge consumers was the metaphorical “last straw”, there was some build up to this point.
Causes
Pharmaceutical companies are an industry that is in a constant state of trouble, lawsuits from patients who suffer adverse side effects, misrepresentation of a product, or bribing doctors, these fines and sanctions add up quickly, As billionaire investor Bill Ackman stated “Drugmakers have agreed to pay at least $9.5 billion in settlements since the start of 2011 with federal and state authorities in the U.S., over such accusations as offering kickbacks to doctors, promoting drugs for unapproved uses, and bribing foreign officials.” (Tozzi, 2015, p. 6). Beyond the fines and sanction, running a pharmaceutical company is immensely expensive and R&D can be a big financial drain on the company’s resources, costing in the billions to bring a single new product to market the company can lose unimaginable amounts of capital in failed projects. In order to curb losses, pharmaceutical companies use acquisitions of current medication patents to help raise profits, as was seen with Valeant’s acquirement of Nitropress and Isuprel.
Possible Alternatives Fixing Valeant’s issues is not a simple task,
Recommendations
Conclusion

Self-Reflection

Management 2130 has begun to teach the core fundamentals of management and business as a whole; by using real world cases and examples the concepts in this course are better solidified and allows students to talk with limited confidence. With the course being a first year class, the expectations were not set very high by myself, I knew coming in that this would be more of an over view class rather than the in depth look into the intricacies of running and managing an actual business. While I cannot honestly say this class has changed my perspective on the field of management, I can absolutely say that I have taken away valuable lessons I did not know prior. Concepts such as SWOT, PESTLE and GHOST analysis are all proving to be incredibly useful to me in the immediate moment as I continue to run my media business. The course overall was one that reflects its standing in the curriculum, and as long as students entering it can keep that frame of reference then a lot of good information about how to analysis and asses a business both internally and externally can be gathered from it. One point of contention taught within the class would be the issue of ethics, a subject with an incredibly fluid definition, this topic I would say would be the one area the class could stand to improve. Ethics is a topic that is not clearly black and white, many gray areas do exist, so to teach that a company should only focus on the social good and not monetary is a massive flaw and one which should be revisited.

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