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Valeant's `Mistakes' Raised Profit, Destroyed Value, Ackman Says

After $77 billion in lost market value, congressional hearings and corporate stumbles, Valeant Pharmaceuticals International Inc.’s CEO and its biggest hedge fund booster stood before a Senate committee, raised their right hands in truth, and said the drug company had gotten things wrong.

“We have made mistakes,” Mike Pearson, Valeant’s chief executive officer, said at the Special Committee on Aging’s hearing on high drug prices. “Valeant was too aggressive. And I, as a leader, was too aggressive.”

“While raising the prices of these drugs increased the profits of Valeant, it destroyed enormous shareholder value,” said Bill Ackman, who sits on the company’s board and whose Pershing Square Capital Management LP was one of its biggest holders.

The stock’s plunge -- down 87 percent since its August peak -- has cost Ackman’s fund billions, and cost Pearson his job. In a half-empty hearing room in Washington Wednesday, it became apparent that it has also forced a major reassessment of Valeant’s strategy of sharp price increases, often on older medicines the company acquired through deals.

“By all accounts, Valeant is the company that perfected the strategy of strategic acquisitions and price hikes that made it Wall Street’s dream come true,” said Senator Claire McCaskill of Missouri, the highest-ranking Democrat on the committee.

At the hearing, McCaskill and her Republican counterpart, Senator Susan Collins of Maine, honed in on four drugs. Isuprel and Nitropress are...