Valeant said it had abandoned the maker of “female Viagra”, effectively giving the company away for free less than three years after it paid $1bn for the asset.
When Valeant acquired the first medicine designed to boost a woman’s libido in August 2015, analysts and investors said it had vastly overpaid for the drug, and the deal is now seen as symbolic of the Canadian drugmaker’s hubris.
Just a few weeks later, Valeant was rocked by an accounting scandal and its shares have since lost more than 95 per cent of value, as investors fret that the company cannot service the huge amount of debt it amassed during its years-long acquisition spree.
Valeant said it would hand the unit, known as Sprout Pharmaceuticals, back to some of its former owners without charging an upfront fee and will at first lose money on the deal, given that it has agreed to loan the company $25m to "fund initial operating expenses".
However, the Canadian drugmaker is entitled to 6 per cent of future sales of the female libido drug as part of the deal.
The owners of Sprout also agreed to drop a lawsuit against Valeant, which alleged that the Canadian drugmaker had failed to effectively market the pill, which is sold under the brand name Addyi.
“Returning Sprout to its former owners will enable us to further streamline our portfolio and reduce complexity in our business,” said Joseph Papa, chief executive of Valeant, who joined the company after the deal had been completed.
- Copyright The Financial Times Limited 2017
