Valeant Pharmaceuticals expects to exceed the $500 million in cost-saving “synergies” it initially said would result from the company’s acquisition of Raleigh-based Salix Pharmaceuticals earlier this month.
On a conference call with analysts Wednesday, Valeant CEO Michael Pearson said all Salix employees were informed of their status with the company on the day the acquisition closed.
Valeant reported on that day that is was laying off 258 people at Salix’s headquarters in North Raleigh and would maintain a limited presence in Raleigh going forward. Bill Bertrand, Salix's general counsel and former chief operating officer, is now the company’s general manager.
Asked to described where the $530 million in Salix synergies were coming from, Valeant Chief Financial Officer Howard Schiller said it was mainly by eliminating all the back office operations. Valeant also doesn’t plan to have a primary care sales force marketing Salix’s drugs and expects to reduce spending on its research and development efforts.
“I think it’s our approach – we’re able to do more with less,” Schiller said. “ ... So a lot of how we can do that with their R&D is by spending less to get the same work done.”
Excluding one-time items, Valeant reported Wednesday earnings per share in the first quarter of $2.36 a share. That was above the $2.34 per share that had been the consensus among analysts who cover the company.
Revenue for the quarter was $2.2 billion, a 16 percent increase over the same period last year. Valeant also raised its full-year revenue guidance from $9.2 billion to $9.3 billion to $10.4 billion to $10.6 billion.
Salix is expected to generate about $1 billion in revenue for Valeant over the final three quarters of 2015. That estimate does not include revenue that may come from Salix receiving regulatory approval to market its best-selling drug Xifaxan as a treatment for irritable bowel syndrome.
The Food and Drug Administration is scheduled to rule on Salix’s application on May 28.
Valeant acquired Salix for $173 per share in an all-cash deal valued at $11.1 billion.