"With his significant business and financial expertise, John will be a strong addition to the board," Valeant CEO Joseph Papa said in a statement. "His experience will be especially valuable as we continue to execute on our transformational strategy to turn around Valeant."
Paulson has made a handful of bad bets on drugmakers, including one on Valeant. That trade resulted in a nearly $2 billion loss for his firm.
Paulson's firm, Paulson & Co., had recorded nearly double-digit losses in several of its larger funds as of the end of March, The New York Times has reported.
"The strategic plan to transform Valeant smartly focuses on rebuilding the company's core franchises in ophthalmology, dermatology and gastroenterology while simultaneously using the proceeds from the sale of non-core assets and operating cash flow to de-lever the company," Paulson said Monday about his new partnership with the drugmaker.
"I am fully supportive of the strategy and leadership team at Valeant," he added.
According to Forbes, Paulson remains one of the hedge fund world's richest billionaires, but he doesn't boast as much money as he used to.
Paulson has seen his net worth drop by about $2 billion over the past year, to $7.9 billion, according to Forbes, having suffered through several wrong trades, which include bets on a Greek recovery and Puerto Rico.