Activist investor Bill Ackman (Trades, Portfolio) will testify before the Senate Special Committee on Aging Wednesday regarding his involvement with Valeant Pharmaceuticals (VRX, Financial), along with outgoing CEO Michael Pearson, just a day after Joseph Papa of Perrigo (PRGO, Financial) was announced as Pearson’s replacement.
The hearing titled “Valeant Pharmaceuticals’ Business Model: the Repercussions for Patients and the Health Care System” will also include former Valeant CFO Howard Schiller, who was asked to resign last month due to improper conduct that led to misstatement of financial results.
Last Monday, Bloomberg reported that Pearson had been deposed before the committee for about nine hours. The investigation is examining Valeant’s business practice of acquiring drugs and hiking prices. Pearson had previously failed to appear for a deposition on April 8, with his lawyer arguing that the committee was unclear about the topics and documents to be discussed.
Ackman, who holds more than 30.7 million shares, was one of Pearson’s biggest supporters as he continued to build his stake even as Valeant saw its stock sink amid accounting troubles and controversies relating to its relationship with a mail-order pharmacy. On March 21, the company announced it would replace Pearson and add Ackman to its board of directors.
Papa has served as CEO of Perrigo since 2006 and has more than 35 years of experience in the pharmaceutical industry. Papa oversaw large growth in the company during his tenure, helping it reach net sales of over $5 billion. Still, Perrigo had its own troubles as the stock lost half its value fighting a hostile takeover attempt from Mylan (MYL, Financial). He’ll have a bigger challenge at Valeant to right its course and build a business model that doesn’t depend on acquisitions.
Valeant’s price has dropped more than 80% over the past year and trades at $36.09 as of Tuesday afternoon.
