Valeant pharmaceuticals Case Study

Background
 Valeant Pharmaceuticals (VRX) is a pharmaceutical company based in Laval, Quebec,
Canada. Valeant Pharmaceuticals has received additional drugs to avoid the costs and time involved in
Research and Development of new drugs. Sometime in 2015 Valeant Pharmaceuticals was the most
important company in Canada.

Task 01
 Identify the organizational structure at Valeant and discuss the growth
strategy that was used by Valeant to push market worth
 In 2008, Michael Pearson was appointed CEO of Valeant Pharmaceuticals and in his
new position introduced a new system. For many years, Valeant Pharmaceuticals was considered a
model for other companies but especially for the pharmaceutical industry. A few years after he became
CEO of the company, Valeant Pharmaceutical was considered one of the fastest growing companies in
the United States, with a market capitalization of an estimated $ 90 billion. During the 2008 financial
crisis, Valeant would sell to investors a low-cost model model, attract it to an investment bank and allow
them to borrow at lower interest rates. Valeant Pharmaceutical, using this opportunity and conditions, has
been able to purchase more than 100 companies, including Bausch & Lomb for contact lenses. A few
years later, Valeant met with a Canadian company called Biovail, which operates offshore companies,
and allowed them to pay less tax than any other pharmaceutical company in the world. In addition,
Pearson had told shareholders that his goal was to make Valeant one of the five largest pharmaceutical
companies in the world. As a strategy, he would talk to shareholders about refunds and responses, which
allowed him to attract the attention of investors who disliked traditional medicine companies, due to the
natural insecurity of drug development. The secret partnership between Valeant and Philidor RX Services
LLC was another opportunity that helped Valeant make hundreds of millions of dollars. Philidor allowed
Valeant to acquire a market share of the drug. Gary Tanner, a former chief executive of Valeant
Pharmaceuticals, abused his position of trust and, due to the weakness of Valeant's internal regulatory
framework, was able to participate in a multi-billion dollar refund program with Philidor. The fact is,
Valeant defrauded insurance companies, Medicare, and the health care system by increasing the price of
prescription drugs. Valeant officials should not have focused on short-term profit and instead have long-
term sustainable growth built on a culture of ethics, hard work and strong business goals.

Task 02
 Discuss the how unethical Valeant was to their main clients, “Patients “by
increasing drug prices over 300% - 1200%?
 Valeant usually takes advantage of its easy access to cheap money to buy drug firms
producing medicines of high value to Valeant. Valeant raised the price of Salix’s diabetes medicine
Glumetza by around 800%. Valeant acquired all outstanding common shares of Salix in 2015, at a price
of $173.00 per share, in an all-cash payment. Later, on March 17, Valeant increased its offer for Salix’s
common stocks to a total value of $10.96 billion, pushing up the per-share acquisition price from $158.00
to $173.00. Valeant, with controlling power over Salix, then raised the price significantly of Salix’s
diabetes medication, Glumetza. This kind of specialty drug usually has a specified market segment, and
drug firms have strong price-setting power in such markets. Reuters found the prices for 4 of the top 10
medicines in the United States were more than doubled in 2011, while the other six drugs’ prices were up
over 50%. The report says the egregious price-raising strategies are adopted by big players, as well as
smaller ones like Valeant and Turing, but the public pays less attention to big firm price practices.
Although significant price increases occur quite often in the drug market, it is hard to determine whether
the “standard industry practice”, as mentioned by Mr. Pearson, exists. Similarly, on February 10th, 2015,
Valeant acquired Marathon Pharmaceuticals’ two drug brands, Nitropress and Isuprel, described above.
Some analysts believe Valeant found these drugs attractive, because they would not face competition
from generics in the short-term, even if patent protections on the medicines expired. This protection is
why firms like Valeant were confident in raising prices and nonchalant about competition. Valeant did not
only buy companies, but it also used its drug distribution channels to promote the usage of expensive
drugs. By controlling companies like Philidor Rx, Valeant urged pharmacy managers to consider more
expensive medicines to replace the current cheap generics. Philidor was also accused of intentionally
changing doctor’s prescriptions to sell more Valeant medicines.
 Strong communication skills
 Ability to learn from the past
 Leadership
 Listening skills
 Understanding
 Willingness to take calculated risks

Michael Pearson’s CEO qualities

 Michael Pearson has amazingly talented and dedicated business pioneers who work
tirelessly and focus on driving progress.
 Michael Pearson had acquired Bausch and Lomb business and accelerated his
development from 4% to 10% since his purchase. remain optimistic in order to exceed the intended cost
of co-operative energy cooperation
 Michael Pearson has had a method of research and development driven by the harvest
that has driven a greater number of things than his other competitors. Since 2014, he has delivered about
19 items to the US exhibition.
 Michael Pearson is guaranteed to pass on Allergan's back-to-back requirements at low
cost and could continue to put resources into any development signs you can think of like Botox. in all
cases you are clearly in the forefront of the initial financial plan
 The performance model will greatly accelerate Allergan's development in emerging
markets.

Task 04
 Explain the concept of balanced scorecard. Discuss how Valeant could
have used balanced scorecard method to measure success rather than focusing only on
Stock prices?
 The Balanced Scoreboard, built in 1993 by Robert Kaplan and David Norton, professors
at Harvard School of Business, continues to improve today. The Balanced Score Card derives its name
from the need for “moderate” financial measures that are only used for testing and strategic control for
non-financial actions such as product quality and customer service. As a strategic management and
evaluation tool, Balanced Scoreboard is currently used by Sears, United Parcel Service, Cement,
pharmaceutical company and hundreds of other companies. For example, Valentine has a financial goal
of achieving 17% or better annual growth in pharmaceutical products and has a target set of achieving at
least 41% of product sales introduced over the past four years. Like a triangle of fraud, pressure, or
incitement, deception is one reason why a person is deceived. For many years, Valeant Pharmaceuticals
was considered a model for other companies but especially for the pharmaceutical industry. The success
of the company was rapid and its growth and rise were strong. In addition, the company plan was praised
by everyone and by many companies and professionals, especially because of its unique compensation
plan. Pearson had his vision for developing managers in terms of performance rewards as measured by
the stock price. It was there that he once again became a victim of pressure within the fraud triangle.
Individuals and other senior executives will receive minimal financial compensation but a large amount of
stock options and options. In other words, in addition to investing millions of dollars to buy drug-dealing
companies and significantly affecting corporate finances through debt collection, managers will receive
less financial compensation. But instead, they will do well if Valeant stocks work well and make a lot of
money if the company's stock rises sharply. For someone who believes that cancer research is a lost
proposition and who thinks that pharmaceutical companies have not made a good profit from it, it is not
hard to predict that greed was his greatest strength and pressure on his life and business decisions.
These pressures lead Mr. Pearson to build on smoke and mirrors, instead of focusing on building a solid
foundation.

Task 05
 Explain the Power of organizational culture and how it can be used to grow
as a organization
 Organizational culture represents certain pre-defined policies that provide guidance to
employees and provide a sense of direction. The corporate culture of Valeant Pharmaceuticals is
analyzed by looking at the corporate culture model of Hofsetede. Art objects are the visible and tangible
objects of the corporate culture of Valeant Pharmaceuticals International Inc. Guessing is deeply
ingrained beliefs and philosophies and provides the basis for the organization Valeant Pharmaceuticals
International Inc. It is important to understand the culture of the organization because in today's
competitive business environment, the culture of the organization plays an important role in gaining
competitive advantage. The organizational culture of Valeant Pharmaceuticals International Inc ensures
that all employees share the same purpose and are in line with the overall purpose of the organization.
The clear alignment of values, goals and philosophies that focus on empowering the staff of Valeant
Pharmaceuticals International Inc. to put their efforts in the right place, to provide good performance and
to ensure a strong commitment to the organization. The corporate culture model proposed by Hofsetede
has field significance as it has been widely used by analysts to analyze the organizational culture of any
company. The organizational culture of the organization Valeant Pharmaceuticals International Inc can
also be analyzed by looking at the Hofsetede cultural model. The model has six dimensions, as listed
below:
 Means targeted goals as opposed to objectives
 Operated internally compared to external operation
 Discipline for a job that goes easier compared to strict discipline
 Local organizational culture compared to professionalism
 Open system compared to closed system
 Staff supervision compared to routine work

Part B
 Draw the diagram of the Value chain and discuss it’s concept by using
Pizza hut.
Value Chain Analysis of the Pizza hut

 The success of Pizza Hut Company because they understand the importance of price
analysis these days, most companies like to imitate a product and make a difference from the original
product.

Referring to Porter's Value Chain diagram drawing activities are divided into two broad categories:

 Primary Activities - Services directly related to the manufacture, manufacture,

distribution, and sale of a product or service to factory customers.
 Support Activities - Economic activities that support the company's core operations.
 Porter’s Value chain Diagram
Example

Explanation of Value Chain

 Pizza Hut offers a variety of orders to their esteemed customers and is almost regarded
as the pioneer of online food sales, Pizza Hut has established a "three-year online business that
generates hundreds of millions of dollars in revenue".

Internal entry

Purchasing all consumer goods is required as

1. Pepperoni
2. Sauce
3. Dough and Bread
4. Potatoes
5. Vegetables and fruits
6. Wheat
7. Spices
8. Chicken, beef and seafood

Performance

 The responsibilities of the General Manager of Pizza Hut Restaurant should be to run,
manage and maintain the business very well. The work of another department will be done efficiently
where all employees are accountable and feel full ownership of their business. Like:
1. Managing the financial side
2. Product order
3. Production
4. Quality monitoring
5. Customer service
6. Staff training and development.
Outgoing Logistics

 Serving the customer with the 'Hot and Oven Pizza delivered to your door' is a line tag for
the pizza hut restaurant. Therefore, in order to ensure that the tag line becomes genuine, the Pizza booth
should provide good transportation facilities to keep their delivery services in good condition and similar to
another commercial right.

Marketing and sales

 Division and Targeted Market Pizza Hut is a family, working people, and student. Pizza
Hut has proven their effectiveness by performing fast services for customers with a busy lifestyle. Pizza
Hut in Malaysia finds a niche full service dine-in and takes up a restaurant compared to other fast food
company.

App

This company renders services to their customers in many ways. Like:

1. Car service delivery service

2. Online Ordering Services: www.pizzahut.com.my
3. Pizza Hut Blog - Pizzahut.com blog
4. Social media sources such as Twitter, Facebook and You tube have been updated
5. Counter Service Hotline Counter -1 300-88-2525

However, there are some customer problem solving issues when customer services respond to their
customer complaint.