Valeant Pharmaceuticals will appoint an interim chief executive officer to replace Michael Pearson who is hospitalized, a source familiar with the matter told Reuters, news that sent shares down 7 percent on Tuesday. The source did not clarify whether the CEO would be temporary or would permanently replace Pearson, 56, who is recovering from a severe case of pneumonia.
Pearson's hospitalization, disclosed on Dec. 25, is the latest challenge for the Canadian drugmaker whose shares have fallen nearly 60 percent since late August in the face of questions from Congress, investors and customers about how it prices and sells drugs.
Valeant only last week said a group of company executives would take over for Pearson until he returned, an unusual arrangement that sent shares diving.
Pearson, who joined Valeant as CEO in 2010 after a 23-year career at consultancy McKinsey & Co, has made rapid-fire acquisitions that greatly increased Valeant's size and share price. Under his leadership last month, the company boosted credibility with wary investors by reaching a deal to distribute its drugs through leading pharmacy chain Walgreens Boots Alliance.
"You have a company whose stock started to move once Pearson joined, and he has really been associated with the growth of Valeant," said Irina Koffler, an analyst at Mizuho Securities USA.
The Wall Street Journal, which earlier reported the search for a CEO, said that CEO candidates include Chief Financial Officer Robert Rosiello and Howard Schiller, a Valeant director who resigned as chief financial officer last year.
Rosiello is one of the three members of the committee that Valeant created last week to temporarily fill in for Pearson. The other two members are General Counsel Robert Chai-Onn and Group Chairman Ari Kellen.
Valeant declined to comment on plans to appoint a new CEO.
The vast majority of patients with pneumonia fully recover, but some can be tired for months, experts say.
Valeant has faced concerns and criticism over steep price increases on some drugs and close ties to a specialty pharmacy that used aggressive methods to overcome insurer barriers to reimbursing its medicines.
Valeant's U.S.-listed shares were down about 7.2 percent at $93.55 in extended trading