Skip to main content

The Globe and Mail

Valeant continues its quest to conquer by acquisition

This March 20, 2002 file photo shows a vial of Botox, made by Allergan.


Since 2008, Valeant Pharmaceuticals has acquired 75 companies. Its latest target? Botox-maker Allergan Inc.

In its quest to become one of the five biggest pharmaceutical firms in the world, Valeant Pharmaceuticals International Inc. is focusing on a surprisingly small area: the face. The Laval, Quebec-headquartered company has been making acquisitions at a furious pace over the past few years, but its broadened product lineup is still geared toward dermatology, eye care, oral health and cosmetic treatments–lubricating skin, clearing vision, whitening teeth and erasing pimples. Valeant made an offer – together with Pershing Square Capital Management CEO Bill Ackman – in April for Botox-maker Allergan Inc., in a stock-and-cash deal worth about $48-billion. Soon, its offerings could smooth out wrinkles, too.

This strategy resembles that of several large food-and-beverage companies, with the likes of PepsiCo and Starbucks busily expanding their offerings to try and grab a bigger share of their customers' stomachs. But Valeant's approach is hardly an imitation: It has become a standout for the way in which it targets and absorbs acquisitions – about 75 of them since 2008, including Bausch + Lomb and 11 others last year. Mike Pearson, Valeant's chief executive, prefers what he calls durable health care products – established brand names that don't rely on patents, many of which can be bought over-the-counter; 85 per cent of Valeant's products fit this description, giving the company smoother, more predictable sales.

Story continues below advertisement

Valeant also takes a different approach to the research and development of new treatments: The firm doesn't do much of it, based on the view that it's an inefficient use of cash. Rather, Valeant spends less than 3 per cent of its revenues on R&D, versus an average of 16 per cent among the biggest industry players. By gutting R&D departments following acquisitions and dealing with duplications in areas such as sales and administration, Valeant can squeeze out savings – an estimated $2.7-billion in the case of Allergan – and make the deals contribute to earnings relatively fast.

Of course, it also helps when you are dealing with just one body part – and the face is one of the most lucrative parts going.

The Deals

Allergan Inc.

Bausch + Lomb Holdings Inc.
Biotrue contact lens solution

Obagi Medical Products Inc.
Neotensil for reducing under-eye bags and wrinkles

Medicis Pharmaceutical Corp.
Solodyn oral antibiotic for pimples

OraPharma Inc.
EZ White tooth whitening system

iNova Pharmaceuticals
DermaDrate skin moisturizer

Report an error Licensing Options
About the Author
Investing Reporter

David Berman has been writing about business and investing since 1995. He has written for a number of magazines, including Canadian Business and MoneySense. He worked at the Financial Post as an investing writer and daily columnist before moving to the Globe and Mail in 2008. More


The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨