Will Dermatology Asset Sales Help Valeant Pharmaceuticals Intl Inc (VRX) Recover?

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The Country Caller discusses whether this attempt would help Valeant reduce its debt or not

According to a recent Bloomberg report, Valeant Pharmaceuticals Intl. Inc. (NYSE:VRX) has hired Morgan Stanley to help it sell off its dermatology units including Solta Medical and Obagi Medical. The move is said to help the drug maker reduce the $31 billion worth of debt pile that has burdened it recently.

Both the units, as per Bloomberg, as worth up to $500 million. Sources familiar with the matter told the publication that sales could commence “as early as this week.”

The drug maker had acquired Obagi three years ago for $418 million. It bought Solta for $250 million after that. Solta makes aesthetically-appealing medical equipments, such as acne and wrinkle treatments.

Valeant has also considered selling other non-core assets, including Provenge, its prostrate cancer treatment, the people revealed. The $7.86 billion company is also trying to lessen its exposure to emerging markets, the sources said, as that could lead to a potential sale of its Egyptian company Amoun Pharmceutical which it acquired last year, and its Latin American business.

The drug maker is going through one of the worst times in its history. From $100 billion, the company’s market capital has now shrunk to under $10 billion owing to its controversial relationship with pharmacy benefit manager Philidor, and its pricing strategy for drugs. The company is also facing a class-action lawsuit these days, adding to the pressure, and pushing investors to call it quits.

This month, Valeant also slashed its earnings before income taxes depreciation and amortization (EBITDA) guidance from $5.6-5.8 billion to $4.8-4.95 billion. The stock has plunged 74.45% for the six months ended June 13. While this move is definitely an important one, it would not be enough by itself to help the company make it out of the red.

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