Valeant CEO defends both Hatboro-based Philidor and move to sever ties

Valeant Pharmaceuticals CEO J. Michael Pearson, trying to stop the slide in his company's stock price, said Tuesday that he was assured by management of Hatboro-based Philidor RX Services L.L.C. that it did nothing wrong, and then he defended the decision to dump Philidor, Valeant's only specialty pharmacy.

With the Valeant relationship ending, Philidor will cease operations by Jan. 30, putting several hundred employees out of work. Valeant, meanwhile, is cutting prices to avoid losing customers because of any supply disruption. Its stock closed down 2.03 percent on Tuesday, at $83.68. Its 52-week high was $263.81.

In a conference call with financial analysts, Pearson said again that "there was no financial fraud in terms of Valeant. But then other allegations were made in terms of the practices of Philidor. And we felt - both the management and the board felt that, given these allegations, given what was happening to our stock price . . . the best thing to do was to sever."

Philidor, which also has a facility in Horsham, filled mostly dermatology prescriptions for Valeant, accounting for about 7 percent of sales, Pearson said. He has denied a report by a Wall Street research company that Valeant had not properly accounted for inventory parked at Philidor. Bloomberg News reported that Philidor employees changed some prescriptions so Valeant's higher-priced medicine would be used instead of cheaper generic drugs.

A Philidor representative said Tuesday in a statement that the company was "deeply disappointed" the Valeant relationship was ending and that employees "have behaved ethically and in keeping with the highest business standards."

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