Valeant Pharmaceuticals International of Aliso Viejo said Friday that it was abandoning hope of becoming a global drug company and would cut nearly half of its workforce as part of a massive restructuring plan.
The maker of neurology and dermatology drugs said it would lay off 130 employees in the U.S. and Mexico and eliminate 1,250 additional jobs overseas. The company will divest many of its overseas operations in the coming months, Valeant said.
"This is the first step in our plan to right-size our company and return it to appropriate levels of profitability," said J. Michael Pearson, who was named chief executive in February. "These changes are in the best interest of the company to generate meaningful change that will produce long-term value."
Once considered a rising player in the pharmaceutical industry, the company has weathered a nonstop series of financial, legal and leadership challenges in recent years.
Valeant is also dealing with a growing affliction affecting all drug manufacturers: not enough new prescription drugs to offset profitable moneymakers that are going off patent in droves. As a result, almost every drug company has trimmed workers and cut operations in the last year.
Charles J. Bramlage, Valeant's North American president, resigned in March. The previous CEO, Timothy C. Tyson, quit weeks earlier.
Valeant founder Milan Panic (pronounced PAH-neesh), an entrepreneur and former prime minister of Yugoslavia, started the company, then called ICN Pharmaceuticals Inc., in a Los Angeles garage in 1959.
Panic and company executives made an aggressive bid to expand Valeant's product line and geographical reach. By the 1990s, it had 12,000 employees and 33 factories and was manufacturing a disparate mix of products in several parts of the world.
But the ambitious plan failed to yield robust sales, and Valeant has continually disappointed investors.
Panic stepped down from the company in June 2002 and agreed to settle a court claim brought by dissident shareholders that part of his executive compensation was unwarranted.
Valeant's former board awarded Panic $33 million in bonus pay for his work in spinning off a division of the company. But shareholders protested that the payment was too rich, and that led to Panic's resignation and the appointment of a new board.
Under new management, Valeant tried to improve its finances by trimming its operations and by focusing on developing new drugs. But the revamp hasn't been successful.
In 2007, the company's income from continuing operations was $25.1 million, compared with a loss of $55.8 million for 2006, leading the company to acknowledge that its performance "is not acceptable to [us] or to our investors."
Valeant has one promising late-stage epilepsy product that it plans to submit for approval to the Food and Drug Administration and European regulators this year.
"We are trying to right the ship and we are focused on the future," Valeant spokeswoman Laurie Little said.
Valeant shares fell 14 cents Friday to $13.36.