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Don’t mess with the public – Lessons from Valeant Pharmaceuticals

June 23, 2016

1 min read

Valeant pharmaceuticals was a darling of the Pharmaceuticals space in the U.S and Canada.

Its model seemed flawless with it focusing on acquiring products and companies and demonstrating pricing power. Example it would hike prices for key drugs which it acquired and then marketed by 1000 % (13.50 $ to 750 $ for a particular drug).

This also meant messing with the public. Was this a sustainable business model? So the underlying lesson to learn is that if a business considers manipulating prices of its products, at some point in time it will certainly be noticed by customers, regulators and policy makers .

Valeant lost its 90% market cap from peak and many investors who believed in the story suffered from cost fallacy and illusion of hope and recovery.

Rajeev Thakkar

He is the Chief Investment Officer of PPFAS Mutual Fund.

Regarded by many as a polymath, his presentations, cover diverse topics ranging from the state of the shipping industry, corporate leadership, capital allocation and individual companies like Google. His audience usually takes to him wholeheartedly, as he possesses the endearing quality of 'talking to' them and not 'talking down to' them. Apart from them, certain presentations may be made by a few of their colleagues on account of them being well versed with a specific topic.

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