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 The Canadian company said CEO Michael Pearson, 56, was being treated
for severe pneumonia.
The decision to put leadership in the hands of three executives was
unusual, experts said, and suggested a lack of confidence in any one
company executive to temporarily fill Pearson's shoes.
A spokeswoman for Valeant, based in Laval, Quebec, declined to
comment on the decision to appoint a trio to take over for Pearson.
Valeant and Pearson have come under pressure for steep price
increases on some drugs and for close ties to a specialty pharmacy
that used aggressive methods to overcome insurer barriers to
reimbursing its medicines.
Pearson was hospitalized with the lung condition on Friday. The
company spokeswoman on Monday declined to say whether he had
experienced any complications or when he might return, adding it was
honoring a family request for privacy. The spokeswoman also declined
to comment on Pearson's medical history.
"It is an inopportune time for their leader to take sick leave after
the company has faced credibility issues in recent months," said
Morningstar analyst Damien Conover. "If the company was on solid
footing, it wouldn't be as much of an issue."
Valeant said its board has created an "office of the Chief Executive
Officer," which will include General Counsel Robert Chai-Onn, Group
Chairman Ari Kellen and Chief Financial Officer Robert Rosiello.
The board also created a committee to oversee and support the office
of the CEO, including lead independent director Robert Ingram,
president of ValueAct Capital Mason Morfit and former Valeant CFO
Howard Schiller.
Jerome Reisman, a partner in the law firm Reisman Peirez Reisman and
Capobianco of Garden City, New York, said Valeant's three-member CEO
committee will likely prove too cumbersome.
"With all these kings they're appointing to the troika, nobody will
be able to make decisions," said Reisman, a financial legal
consultant to numerous drugmakers. "A committee on a committee just
won't work. You need a strong CEO."
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Dr. Bruce Hirsch, an infectious disease specialist at North Shore
University Hospital in Manhasset, New York, said the vast majority
of patients with pneumonia fully recover thanks to effective
antibiotics. But others are slow to recover and can be tired for
months afterward, he said, particularly if they have pre-existing
structural lung disease, including damage from emphysema,
bronchitis, asthma and smoking.
He noted pneumonia can be caused by a range of bacteria, viruses,
fungi, as well as inflammation, and in very severe cases can cause
heart attacks or heart failure.
Pearson, who joined Valeant as CEO in 2010 after a 23-year career at
consultancy McKinsey & Co, has made rapid-fire acquisitions that
greatly increased Valeant's size and share price. But Valeant's
stock has plunged more than 60 percent since August, due largely to
questions about the company's marketing practices and the
sustainability of its business model.
Investors have been turning up pressure on the Laval, Quebec-based
company to provide a more detailed plan on how it will boost profits
in 2016.
Under a deal announced this month, Walgreens Boots Alliance Inc <WBA.O>
will take over many functions previously handled by specialty
pharmacy Philidor Rx Services. Valeant cut ties with the Philidor in
response to allegations of aggressive billing practices.
Valeant shares fell 10.5 percent to $102.14 on the New York Stock
Exchange.
(Additional reporting by Natalie Grover in Bengaluru; Editing by
Shounak Dasgupta, Jeffrey Benkoe, David Gregorio and Leslie Adler)
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