Valeant Pharmaceutical's head office is seen in Laval, Que. The two dermatology businesses could fetch as much as $500-million (U.S.).Ryan Remiorz/The Canadian Press
Valeant Pharmaceuticals International Inc. is working with advisers at Morgan Stanley as it weighs the sale of dermatology units Obagi Medical Products and Solta Medical to raise cash to reduce debt, according to people familiar with the matter.
The two businesses could fetch as much as $500-million (U.S.) and attract interest from other pharmaceutical companies, the people said, asking not to be identified because the deliberations are private. The sale process could start as early as this week, they said.
Representatives at Valeant and Morgan Stanley declined to comment.
Valeant bought the maker of prescription skin-care products Obagi in 2013 for about $418-million. Later that year, it agreed to buy Solta for about $250-million. Solta designs, makes and sells medical devices for aesthetic applications such as wrinkle and acne treatments.
Valeant is selling non-core assets to reduce its $31-billion debt load. The company is weighing the sale of some of its smaller cosmetic and pharmaceutical units, including the Provenge treatment for advanced prostate cancer and some drugs it acquired from Marathon Pharmaceuticals last year, people familiar with the matter have said. The company is also seeking to reduce its exposure to emerging markets, which could lead to the sale of its Latin American operations as well as Egyptian drug maker Amoun Pharmaceutical Co., people have said.
The company's shares have fallen about 90 per cent in the last 12 months, after a series of setbacks including scrutiny of the company's pricing practices, cuts to guidance and the departure of chief executive officer Mike Pearson.
Earlier this month, Valeant cut its forecast for earnings before interest, taxes, depreciation and amortization for the second time this year. Ebitda is projected to drop to $4.8-billion to $4.95-billion, down from a March estimate of $5.6-billion to $5.8-billion, the company said. That puts Valeant up against financial thresholds it has to maintain to comply with its agreements with lenders.