WHEN: Today, Wednesday, September 7th
WHERE: CNBC's "Closing Bell"
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Valeant Chairman & CEO Joseph Papa and CNBC's Meg Tirrell today, Wednesday, September 7thon CNBC's "Closing Bell" (M-F, 3PM-5PM ET). Following is a link to the video on CNBC.com: http://video.cnbc.com/gallery/?video=3000549262.
All references must be sourced to CNBC.
KELLY EVANS: PHARMACEUTICAL COMPANY VALEANT DOWN NEARLY 90% SINCE THIS TIME LAST YEAR. QUESTIONS SURROUNDING THE COMPANY'S PRICING STRATEGY AND TIES TO SPECIALTY PHARMACY PHILIDOR, AMONG THE REASONS THE STOCK TOOK A BIG HIT. LET'S GET OUT TO THE WELLS FARGO HEALTH CARE CONFERENCE WHERE WE ARE NOW JOINED BY OUR OWN MEG TIRRELL ALONG WITH VALEANT'S NEW CEO JOSEPH PAPA IN A CNBC EXCLUSIVE. MEG?
MEG TIRRELL: KELLY, THANK YOU SO MUCH. AND JOE, THANKS FOR JOINING US.
JOSEPH PAPA: MY PLEASURE, MEG. GREAT TO BE HERE.
TIRRELL: SO FOUR MONTHS INTO THE JOB, FOUR MONTHS INTO THE TURN AROUND, YOU HAVE RENEGOTIATIED YOUR DEBT CONVENENCE, YOU'VE RESHUFFLED MANAGEMENT. WHAT IS NEXT? ASSET SALES? WHAT CAN WE EXPECT NEXT FOR VALEANT?
PAPA: WELL, I THINK FIRST AND FOREMOST, WHAT WE ARE REALLY TRYING TO FOCUS ON IS HOW CAN WE IMPROVE PATIENTS' LIVES, HOW CAN WE IMPROVE PEOPLE'S LIVES THROUGH ALL OF OUR HEALTH CARE PRODUCTS. THAT'S FIRST AND FOREMOST THE MISSION THAT WE ARE FOCUSING ON. BUT DO I HAVE SOME OTHER ACTIVITIES? YEAH. THERE ARE STILL SOME ADDITIONAL PEOPLE THINGS THAT WE ARE WORKING ON. IN TERMS OF JUST RERECRUITING THE TEAM, THE EXISTING TEAM, TO THE BUSINESS. SO THAT'S ONE OF THE THINGS I THINK IS JUST CRITICALLY IMPORTANT. ESPECIALLY IN MY SALES ORGANIZATION. THEY ARE ABSOLUTELY KEY FOR US FOR THE FUTURE.
TIRRELL: HAS THAT BEEN A CONCERN THAT YOU'RE LOSING FOLKS? YOU'VE HAD TO DO THINGS MAYBE OVER THE TOP TO RETAIN THEM?
PAPA: NO. I WOULD SAY IT DIFFERENTLY. I WOULD SAY THAT WHAT WE'VE TRIED VERY HARD TO DO IS REALLY RECOGNIZE THE VALUE THAT THEY BRING TO THE ORGANIZATION. IMPORTANTLY, WHENEVER THERE IS A CHANGE IN ANY LEADERSHIP, THERE IS ALWAYS SOME UNCERTAINTY. AND WE'VE BEEN WORKING VERY HARD FROM A COMMUNICATIONS POINT OF VIEW TO MAKE SURE THAT THERE IS OUTREACH TO THEM. IMPORTANTLY, ONCE AGAIN, JUST REINFORCING THE MISSION OF IMPROVING PEOPLE'S LIVES THROUGH OUR HEALTH CARE PRODUCTS. BECAUSE I THINK THAT'S A VERY, A NOBLE CAUSE. IT'S ONE THAT THEY ARE EXCITED ABOUT AND CERTAINLY, I'M VERY EXCITED ABOUT TALKING TO THEM ABOUT IT.
TIRRELL: NOW, ONE THING THAT YOU'VE BEEN FOCUSING ON, I KNOW, IS POTENTIAL FOR ASSET SALES. AND YOU HAVE SAID YOU HAVE THE POTENTIAL TO SELL UP TO $2 BILLION IN REVENUE OF PRODUCTS. AND YOU HAVE GENERALLY FOCUSED ON NONCORE ASSETS. DOES THAT MEAN A BAUSCH & LOMB IS OFF THE TABLE FOR SELLING?
PAPA: WELL, I'M NEVER GOING TO SAY NEVER, BUT WHAT I WOULD SAY IS THAT WHAT WE HAVE LOOKED AT IS THERE ARE SOME CORE ASSETS THAT WE BELIEVE ARE VERY IMPORTANT TO THE FUTURE OF US. THE DERMATOLOGY FRANCHISE. THE EYE CARE FRANCHISE, BAUSCH & LOMB. OUR SALIX GI CATEGORY ARE VERY IMPORTANT TO US. AS WELL AS WHAT WE DO IN THE CONSUMER FACING SIDE OF OUR BUSINESS WITH CERAVE, AS AN EXAMPLE. THOSE ARE CRITICAL IMPORTANT US TO. WOULD WE HAVE TO LOOK AT SOMETHING IF SOMEONE CAME FORWARD WITH SOMETHING? OF COURSE WE WOULD BECAUSE WE ARE A PUBLIC COMPANY. WE HAVE OVER $30 BILLION OF DEBT. WE WOULD HAVE TO LOOK AT IT. BUT I THINK MORE IMPORTANTLY, WE BELIEVE THERE IS SOME, WHAT I REFER TO AS NONCORE ASSET SALES, THAT COULD YIELD UP TO PROCEEDS OF $8 BILLION THAT THAT WOULD BE WHERE WE WILL FOCUS FIRST IN TERMS OF OUR ASSET SALES.
TIRRELL: AND YOU'VE SAID THAT POTENTIAL VALUATION OF $8 BILLION IS BASED IN PART ON UNSOLICITED INTEREST FROM THE OUTSIDE. SO, CAN WE EXPECT ASSET SALES ANNOUNCEMENTS IN THE NEAR FUTURE?
PAPA: WELL, I THINK IT IS HOW YOU DEFINE FUTURE. NEAR FUTURE. I WOULD SAY THAT WE BELIEVE – CERTAINLY MY HISTORY OF BEING IN THE PHARMACEUTICAL BUSINESS FOR OVER 30 YEARS, IT TAKES SOME AMOUNT OF TIME. I USUALLY WOULD CHARACTERIZE IT TO REACH ANY TYPE OF A DEAL ON AN ASSET SALE IS GOING TO TAKE APPROXIMATELY SIX MONTHS. SO, TOWARDS THE END OF THE YEAR, CERTAINLY WE COULD HAVE SOME ANNOUNCEMENT. I WILL TELL YOU, WE HAVE ALREADY ANNOUNCED THREE. ALBEIT SMALLER ASSETS, WE ANNOUNCED THE SALE OF RUCONEST, AN ORPHAN DISEASE PRODUCT. WE ANNOUNCED THE OUTLICENSING OF THE EUROPEAN RIGHTS OF BRODALUMAB, ONE OF OUR NEW DRUGS FOR PSORIASIS. AND WE ALSO SOLD OEM BUSINESS TO STRYKER. SO WE HAVE DONE THREE THINGS ALREADY, BUT THERE IS MORE TO BE DONE HERE.
TIRRELL: I WANT TO TRANSITION OVER INTO SOME COMMENTS THAT YOUR COLLEAGUE, BRENT SAUNDERS THE CEO OF ALLERGAN, MADE THIS WEEK. A PLEDGE SAYING THAT THERE IS A SOCIAL CONTRACT THE DRUG INDUSTRY HAS TO NOT RAISE PRICES EGREGIOUSLY. IS THIS A PLEDGE YOU THINK THE REST OF THE INDUSTRY SHOULD TAKE? IS IT SOMETHING YOU WOULD TAKE?
PAPA: WELL, I THINK I WANT TO LOOK A LITTLE BIT MORE INTO WHAT BRENT SAID, BUT I THINK ON BALANCE, BRENT IS DOING THE RIGHT THING. I THINK HE IS TRYING TO SAY TO SOCIETY THAT THE PHARMACEUTICAL COMPANIES ARE DOING SOMETHING FIRST AND FOREMOST TO MAKE A DIFFERENCE IN PEOPLES' LIVES THROUGH THE HEALTH CARE PRODUCTS, WHICH I THINK I CERTAINLY AGREE. I THINK HE IS TALKING ABOUT MAKING SURE THERE IS ACCESS FOR PRODUCTS AND HE IS MAKING SURE THAT PRICING IS REASONABLE REFLECTING THE NEEDS OF BOTH THE COMPANY AS WELL AS SOCIETY. SO, ON BALANCE, I THINK IT IS VERY SIMILAR TO WHAT I DID WHEN I JOINED. EARLY ON I ESTABLISHED A PATIENT ACT PRICING COMMITTEE TO LOOK EXACTLY AT THE QUESTION OF PATIENT ACCESS AND PRICING. ALBEIT, I CAME FROM A LITTLE BIT DIFFERENT BACKGROUND WITH SOME OF THE THINGS THAT HAPPENED AT VALEANT. SO I THINK ON BALANCE HE SEEMS TO BE CORRECT. I WANT TO LOOK A LITTLE MORE INTO IT MORE, THOUGH.
EVANS: MR. PAPA, ON THAT VEIN, IT IS KELLY HERE. WHY CAN'T MYLAN JUST DROP THE PRICE OF THE EPIPEN?
PAPA: HI, KELLY. WELL, I'M NOT GOING TO MAKE ANY COMMENTS SPECIFICALLY ON MYLAN. I WOULD SAY AS A GENERAL COMMENT, ONE OF THE ISSUES IS THAT YOU HAVE TO ENSURE THAT YOUR PATIENTS CAN HAVE ACCESS TO PRODUCTS. AT THE SAME TIME, TO REALIZE AN APPROPRIATE PRICE FOR YOUR PRODUCTS. I THINK IT IS THAT ACCESS QUESTION IS PROBABLY ONE OF THE THINGS THAT THEY ARE THINKING ABOUT IN TERMS OF LOOKING AT THE OPPORTUNITIES FOR ACCESS AND INDEED THE PRICING POINT. BUT I DON'T WANT TO MAKE ANY SPECIFIC COMMENTS ON WHAT MY OWN SITUATION IS ALL ABOUT.
EVANS: TALKING ABOUT VALEANT THEN, THE CRITICS OF THE FORMER CEO SAID, LOOK, THIS COMPANY IS BASICALLY GROWING BY BUYING COMPANIES AND BY RAISING DRUG PRICES. IF THOSE TWO THINGS AREN'T GOING TO BE A KEY PART OF THE STRATEGY NOW, HOW IS VALEANT GOING TO GROW?
PAPA: SO ONE OF THE THINGS WE'RE TRYING TO DO IS CREATE THE NEW VALEANT. THE NEW VALEANT IN MY MIND IS GOING TO BE ALL ABOUT HOW DO WE MAKE A DIFFERENCE IN PEOPLES' LIVES THROUGH OUR HEALTH CARE PRODUCTS. THAT'S ONE OF THE THINGS THAT WE ARE FOCUSING ON. BY THAT DEFINITION, IT IS FOCUSING ON THE EXISTING PRODUCTS WE HAVE TODAY. SO FOR EXAMPLE IN DERMATOLOGY, WE HAVE ONE OF THE BEST PRODUCT PORTFOLIOS IN DERMATOLOGY TODAY. IN ADDITION TO THAT, WE'VE GOT GREAT PRODUCTS COMING FOR THE TREATMENT OF PSORIASIS. THOSE ARE THE TYPES OF THINGS WE ARE GOING TO FOCUS ON IN ORDER TO GROW THE BUSINESS FOR THE FUTURE. I STILL BELIEVE THAT THAT'S THE WAY PHARMACEUTICAL COMPANIES BASED ON THE 30 PLUS YEARS I'VE HAD IN THE BUSINESS WILL GROW AND WILL BE SUCCESSFUL FOR THE FUTURE.
EVANS: WHAT IS IT LIKE WORKING WITH BILL ACKMAN?
PAPA: WELL, I HAVE 12 – THERE'S 12 BOARD MEMBERS INCLUDING MYSELF. SO 11 OTHER BOARD MEMBERS AND BILL HAS BEEN A WONDERFUL SOURCE OF INFORMATION TO HELP US AS WE THINK ABOUT THE FUTURE, THE BUSINESS AT VALEANT. SO HE HAS BEEN INCREDIBLY HELPFUL TO ME AS I JOINED THE COMPANY. I WOULD SAY, THOUGH, I'VE GOT OTHER BOARD MEMBERS AS WELL WHO BRING DIFFERENT EXPERTISE. I'VE GOT NEW BOARD MEMBERS THAT AS WE CREATED THE NEW VALEANT, WE'VE GOT 10 NEW BOARD MEMBERS THAT ARE WITHIN THE LAST 12 MONTHS JOINING THE COMPANY. SO THAT'S CLEARLY A NEW BOARD. BUT SOME OF THEM BRING GREAT EXPERIENCE, LIKE BILL, IN THE INVESTOR WORLD. OTHERS BRING EXPERIENCE IN THE PHARMACEUTICAL WORLD. SO WE'VE GOT A WHOLE HOST OF DIFFERENT PEOPLE ALL DESIGNED TO BRING US WHAT WE THINK IS IMPORTANT FOR HELPING TO MAKE A DIFFERENCE IN PATIENTS' LIVES.
TIRRELL: SO JOE, AS YOU ARE FOCUSING ON THE NEW VALEANT, YOU STILL HAVE TO DEAL WITH A LOT OF THE THINGS LEFT OVER FROM THE OLD VALEANT. AND THAT INCLUDES A LOT OF GOVERNMENT AND LEGAL INVESTIGATIONS, SHAREHOLDER LAWSUITS. WHAT ARE YOU DOING TO PREPARE FOR THE POTENTIAL FALL OUT FROM THAT? HAVE YOU SET ASIDE A CONTIGENCY FUND?
PAPA: YEAH, WE CLEARLY HAVE THOSE ISSUES THAT WE ARE GOING TO DEAL WITH. ONE OF THE FIRST THINGS I HAVE DONE NOW IS I HAVE HIRED A NEW GENERAL COUNCIL, CHRISTINA ACKERMANN. WONDERFUL INDIVIDUAL WHO HAS 15 PLUS YEARS EXPERIENCE WITH NOVARTIS, HAS COME TO JOIN US AND SHE HAS JUST BEEN A GREAT HELP TO ME AS I'VE STARTED TO WORK ON THOSE QUESTIONS AND KEEPS ME VERY WELL INFORMED AND UPDATED ON THE QUESTIONS. WE HAVE NOT SET ASIDE ANY SPECIFICS. ONE OF THE THINGS YOU HAVE TO DO FROM AN ACCOUNTING PROCESS IS YOU HAVE TO HAVE AN ESTIMABLE AND A PROBABLE ACCOUNTING. AT THIS POINT, WE DON'T. WE ARE GOING TO WORK VERY CLOSELY WITH ALL OF THE INVESTIGATIONS, THOUGH, AND RESOLVE THEM EXPEDITIOUSLY.
TIRRELL: AND WE ARE JUST ABOUT OUT OF TIME, BUT I HAVE TO JUST ASK ONE MORE QUESTION ON THAT. IS THERE A CONCERN THAT WITH YOUR DEBT CONVENANCE, THE LEGAL PAYMENTS COULD BE AN ISSUE?
PAPA: WELL, MY SENSE OF THIS IS THAT WE HAVE POTENTIAL LEGAL PAYMENTS FOR THE FUTURE. I THINK IT IS GOING TO TAKE SOME TIME TO RESOLVE THOSE. IN THE MEANTIME, WE ARE GOING TO CONTINUE TO GROW OUR EBITDA OUR EARNINGS FOR THE COMPANY. AND WE ARE ALSO GOING TO LOOK AT THESE ASSETS SALES. SO WE THINK WE CAN WORK OUR WAY THROUGH THIS IN A VERY PRACTICAL WAY TO GET THROUGH THIS. BUT YOU KNOW, UNTIL WE GET TO THAT POINT, I WON'T HAVE THE ANSWER BUT CERTAINLY, WE ARE WORKING HARD ON THAT.
TIRRELL: WELL JOE, THANK YOU SO MUCH FOR JOINING US. WE REALLY APPRECIATE IT.
PAPA: MY PLEASURE, MEG. PLEASURE TO BE HERE.
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