Valeant back in action with sights set on a smaller target

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Valeant Pharmaceuticals International Inc. does not sit still for long.

The notoriously acquisitive pharma giant is back in the M&A game, albeit with a much smaller deal than the failed blockbuster attempt last year to take over Allergan Inc.

Laval, Que.-based Valeant says it has entered into a so-called "stalking horse" bid for world-wide rights to Dendreon Corp.'s anti-prostate-cancer drug and other assets.

The value of the proposed transaction – which can be knocked out by higher bids in a sale process overseen by bankruptcy court – is $296-million (U.S.) in cash. That's chump change compared with the $54-billion hostile offer for Botox-maker Allergan, which was trumped by a friendly $66-billion offer from Actavis PLC.

But it shows that Valeant chief Michael Pearson remains on track with his corporate strategy of growth-by-acquisition.

And the Dendreon deal also represents further diversification – this time into oncology – for Valeant, which is in everything from oral care and vision treatment to podiatry, wrinkle-shrinking and acne medicine.

Although Dendreon is the first notable proposed takeover since Allergan, Valeant has been quietly doing "a few small transactions" that are well below the level of materiality since Allergan, spokeswoman Laurie Little said.

"We have always pursued tuck-in acquisitions and it is a major part of our strategy," she said in an e-mail Friday.

Dendreon also fits Mr. Pearson's approach of buying companies that have products already well along in development or with regulatory approval, thus avoiding the huge risks and costs of early-stage development R&D.

Stung by the criticism during the heated Allergan takeover battle that Valeant fuels growth by buying companies and then slashing their R&D and marketing departments, Mr. Pearson has insisted in recent media interviews that the company also targets organic growth.

He is also betting on a big part of future growth coming from the sale of products – such as contact lenses – aimed at the rapidly growing middle classes in China and elsewhere in Asia, as well as the Middle East and Latin America.

Meanwhile, Valeant has bought 30 seconds of airtime during the third quarter of the upcoming Super Bowl for Jublia, a topical treatment for a fungal infection of toe nails. It's called "Tackle It."

And Mr. Pearson has apparently not given up on another big swing for the fences.

He said earlier this year that he is concentrating on smaller acquisitions in 2015 but that he couldn't rule out a bigger deal if the price is right.