Valeant backs away from female libido pill
Only two years ago, Valeant was so keen to get involved with a pill reported to increase the female libido that it was prepared to pay $1 billion for the company that produced it – half of which was upfront. Now, it’s had cold feet on the deal and decided to sell the drug back to the company – taking a $1 billion hit for just 6% of future sales of the drug.
If there was ever an exemplifier of the nature of Valeant’s acquisition splurge under former CEO Michael Pearson, this would be it. The drug had already been noted as a risky venture, after two previous FDA rejections but Valeant pressed ahead and were rewarded with only $10 million in sales during the entirety of 2016.
The drug had been touted as a potential blockbuster but numerous hurdles meant this never seemed feasible. The pill, known by its brand name Addyi, has to be taken daily, is not recommended for use alongside alcohol and is only deemed to provide a modest benefit to some women.
All this led to poor sales and, worse, a lawsuit from investors, who claimed that Valeant had rowed back on previous terms of its acquisition after it drastically cut spending on marketing the drug.
Now, the company is attempting to put the disaster behind them. It has even agreed to provide a $25 million loan to investors to aid the company, Sprout, to begin its campaign to get the drug to a wider market.
“Returning Sprout to its former owners will enable us to further streamline our portfolio and reduce complexity in our business,” said Joseph C. Papa, chairman and CEO, Valeant. “As we transform Valeant, we are focusing our resources on our core businesses to best serve our shareholders, customers and patients. These areas include eye health, gastroenterology and dermatology.”
With the current arrangement agreed, Valeant is no longer facing a lawsuit and will effectively allow them to wash its hands of the drug – although with a potential 6% agreement to take sales of the drug.
However, analysts don’t hold much hope that there is much to be made in the way of sales of the drug. With a price tag of $350 to $400 per month and a raft of warnings to accompany the products, it looks a hard sell.
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