Essays on Prosperity of Valeant Company Case Study

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The paper "Prosperity of Valeant Company" is a worthy example of a case study on business. In any business, there are several components that are considered crucial for its prosperity. Communication is one of these key components. For the smooth running of operations, people in the organization need to communicate so as to avoid misunderstandings. The working environment must be conducive and welcoming enough such that it allows the workers to be able to put their ideas across without fear. This will go a long way in saving the business from risks that could arise from bad decision making as a result of poor communication.

In the report below, we shall take an example of Valeant Pharmaceuticals Company which was involved in a price hike saga that led to the drop of its shares, attracted public outcry, and a lot of scrutiny from concerned bodies. Background Valeant Pharmaceuticals deals in special drugs in the fields of neurology, dermatology and infectious diseases. It is mostly known for mergers and acquisitions. In the period 2015-2016, Valeant Pharmaceuticals Company was caught up in a scandal that involved price hikes related to the drugs they were selling.

For example, Mephyton, one of Valeant’ s drugs that helps in blood clotting had been increased eight times from July 2014. The price was formerly $9.37 and had shot up to $58.67 per tablet. Edecrin which is a diuretic had increased from $470 to $4,600 in just a period of one year. This happened in early 2015 when the top management had met to agree to set prices on a new cardiac drug. The chief executive Michael Pearson was however of the opinion that a sharp increase would be able to achieve its internal profits.

Once it completed its purchase of the drug, the coast was tripled. It was Mr. Pearson’ s known habit in yesteryears of quickly pursuing aggressive price increments on recently acquired drugs. Statement of Problem The major drugs in question that brought the company into the spotlight in the price hike saga are Nitropress and Isuprel (Helfland 2015, n. p). The two were not the only drugs involved in the scandal as the company was involved in the hike of prices on 54 other drugs in 2015 alone by 65.6% on average.

In 2014, it is reported by Deutsche Bank analysis that 62 drugs were hiked by 50%. The increases were quite substantial. For instance, in 2015, the largest hike was by a drug; Glumetza was 550% more expensive in October compared to its price in January. Nitropress and Isuprel were hiked up by 236.6% and 536.7% respectively (Helfland, 2015 n. p). Consumers of Valeant complain about its habit of purchasing existing drugs and consequently raising the prices exorbitantly and in a short span of time.

They are of the opinion that new drugs should be developed. Valeant would however not answer any queries with regards to their pricing procedures over the phone when asked about it. In light of the communication techniques studied in this unit, communication is seen to be the most prevalent issue given that it is a known habit for the Valeant Company to be hiking prices without prior consultation with top management. It is seen as a lack of cohesion given that decisions are made quickly and there is no time to weigh the pros and cons that may arise from the decisions.

The decisions made overnight to increase the prices are only targeting increasing the internal profits of the company without considering the parties involved such as the investors and customers. The loyal customers may not be able to afford the new prices as people work within a limited budget with the limited resources that are available for medical expenses. In an interview with the Canadian Broadcasting Corporation (CBC), Mr. Pearson said that the company was rather aggressive in boosting the prices of its drug products.

Valeant is just one of the many examples of the practices but on the extreme side, that has been taking place in the pharmaceutical industry for a number of years. The lack of control over prices has made the manufacturers to heavily rely on price increments in order to maintain a steady flow in revenue and profits. In addition, Valeant is known for acquiring companies and retrenching their employees so as to maximize on savings. A small percentage of their revenue is used on research and development, about 3% (Pollack & Tarvenise, 2015 n. p)

References

CAN Finance Exclusive (2016). Valeant Pharmaceuticals (VRX) Stock: Time for a Big Recovery.

Eavis, P. (2016).Valeant’s Accounting Error a Warning Sign of Bigger Problems. The New York Times.

Gretchen, M. (2015). Valeant’s High-Price Drug Strategy. The New York Times.

Helfand, C. (2015). Valeant's Price-hike Strategy goes far beyond Two High-profile Increases. FiercePharma

Lynch, N.S., and Ingram, D. (2015). Valeant Hires Attorney, Crisis Management Firm as U.S. Scrutiny Mounts. Reuters.

Pearson, J., & Nelson, P. (2000). An introduction to human communication:

Understanding and sharing. Boston, MA: McGraw-Hill.

Pollack, A., and Tavernise, S. (2015). Valeant’s Drug Price Strategy enriches it but Infuriates Patients and Lawmakers. The New York Times.

Udland, M. (2016). Valeant Whiffs on Earnings and Slashes Guidance, and now the Stock is Getting Crushed. Business Insider Nordic

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