Valeant
`Pharmaceuticals
`International, Inc.
`
`Q3 2015 Financial Results
`October 19, 2015
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`ACRUX DDS PTY LTD. et al.
`
`EXHIBIT 1591
`
`IPR Petition for
`
`U.S. Patent No. 7,214,506
`
`Page 1 of 44
`
`

`

`Forward-looking Statements
`
`Forward-looking Statements
`Certain statements made in this presentation may constitute forward-looking statements, including, but not limited to, statements regarding
`marketing efforts, portfolio expansion, debt reduction, future acquisitions and dispositions, share repurchases, future price increases and the mix of
`volume and price with respect to future growth, the relative mix of the components of our future business, expectations with respect to litigation and
`government investigations, expected future performance, including guidance with respect to revenue, Cash EPS, adjusted cash flow from operations
`and organic growth, future inventory levels, and expectations with respect to the timing of and outcome of development programs, regulatory
`approvals and commercial plans with respect to product candidates. Forward-looking statements may generally be identified by the use of the
`words “anticipates,” “expects,” “intends,” “plans,” “should,” “could,” “would,” “may,” “will,” “believes,” “estimates,” “potential,” “target,” or “continue”
`and variations or similar expressions. These statements are based upon the current expectations and beliefs of management and are subject to
`certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks
`and uncertainties include, but are not limited to, risks and uncertainties discussed in the Company's most recent annual or quarterly report and
`detailed from time to time in Valeant’s other filings with the Securities and Exchange Commission and the Canadian Securities Administrators, which
`factors are incorporated herein by reference. Readers are cautioned not to place undue reliance on any of these forward-looking statements. These
`forward-looking statements speak only as of the date hereof. Valeant undertakes no obligation to update any of these forward-looking statements to
`reflect events or circumstances after the date of this presentation or to reflect actual outcomes.
`
`
`Non-GAAP Information
`To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the company uses non-
`GAAP financial measures that exclude certain items, such as amortization of inventory step-up, amortization of alliance product assets & property,
`plant and equipment step up, stock-based compensation step-up, contingent consideration fair value adjustments, restructuring, integration,
`acquisition-related and other costs, In-process research and development, impairments and other charges, ("IPR&D"), legal settlements outside the
`ordinary course of business, the impact of currency fluctuations, amortization including intangible asset impairments and other non-cash charges,
`amortization and write-down of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest, loss on extinguishment of debt,
`(gain) loss on assets sold/held for sale/impairment, net, (gain) loss on investments, net, and adjusts tax expense to cash taxes. Management uses
`non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing
`non-GAAP financial measures, management intends to provide investors with a meaningful, consistent comparison of the company’s core operating
`results and trends for the periods presented. Non-GAAP financial measures are not prepared in accordance with GAAP. Therefore, the information
`is not necessarily comparable to other companies and should be considered as a supplement to, not a substitute for, or superior to, the
`corresponding measures calculated in accordance with GAAP.
`
`
`Note 1: The guidance in this presentation is only effective as of the date given,
`October 19, 2015, and will not be updated or affirmed unless and until the
`Company publicly announces updated or affirmed guidance.
`
`1
`
`Page 2 of 44
`
`

`

`Q3 2015 Highlights
`
` Exceeded top line and bottom line Q3 guidance; 5th consecutive quarter of >10%
`organic growth
` Includes negative FX impact of $172M revenues and $0.13 Cash EPS
` Continued outperformance of U.S. businesses, particularly dermatology and
`contact lens
` Strong organic growth in China (23%), South Korea (15%), and Mexico (10%)
` Continued strong Salix performance
` IBS-D indication for Xifaxan (including DTC campaign)
` Salix inventories reduced to 8-10 weeks
` Addyi launched 10/17
`
` Four deals closed in October
` Brodalumab
` Sprout
` Synergetics
` Amoun (expected to close today)
` Strong cash flow from operations
` GAAP cash flow from operations $737M
` 90% cash conversion
`
`2
`
`Page 3 of 44
`
`

`

`Q3 2015 Financial Results
`
`
`
`
`
`
`Q3 2015
`
`
`
`
`Q3 2014
`
`
`
`
`Y/Y%
`
`
`
`Adjusted
`Y/Y% (a)
`
`Total Revenue
`
` $2.8 B
`(guidance $2.6 – 2.8B)
`
` $2.1 B
`
`36%
`
`44%
`
`Cash EPS
`
`$2.74
`(guidance $2.60 – 2.70)
`
`$2.11
`
`30%
`
`36%
`
`GAAP Cash Flow
`from Operations
`
`Adjusted Cash Flow
`from Operations
`
`$737M
`
`$619M
`
`19%
`
`26%
`
`$865M
`
`$771M
`
`12%
`
`18%
`
`a) Negative FX Y/Y Impact: Revenue $172M, Cash EPS $0.13
`
`3
`
`Page 4 of 44
`
`

`

`Q3 2015 Organic Growth
`
`Same Store Sales – Y/Y growth rates for businesses that have
`been owned for one year or more
`
`
`
`Total U.S.
`
`Total Developed
`
`Total Emerging Markets
`
`Total Company
`
`
`
`
`
`Q3 2015
`
`YTD 2015
`
`22%
`
`16%
`
`3%
`
`13%
`
`27%
`
`19%
`
`5%
`
`15%
`
`Pro Forma – Y/Y growth rates for entire business, including
`businesses that have been acquired within the last year
`
`
`
`Total U.S.
`
`Total Developed
`
`Total Emerging Markets
`
`Total Company
`
`Q3 2015
`
`YTD 2015
`
`27%
`
`21%
`
`5%
`
`17%
`
`26%
`
`21%
`
`4%
`
`17%
`
`4
`
`Page 5 of 44
`
`

`

`Q3 2015 Top 30 Brands (1/3)
`
`($M)
`
`
`
`Product
`
`Q3
`2014
`
`Q4
`2014
`
`Q1
`2015
`
`1) Xifaxan
`
`2) Jublia
`
`3) Wellbutrin XL*
`
`4) SofLens*
`
`5) Xenazine
`
`6) Provenge
`
`7) Solodyn
`
`8) Ocuvite / Preservision*
`
`9) ReNu*
`
`10) Glumetza
`
`-
`
`13
`
`80
`
`95
`
`56
`
`-
`
`54
`
`62
`
`59
`
`-
`
`53
`
`82
`
`89
`
`52
`
`-
`
`61
`
`62
`
`60
`
`-
`
`62
`
`68
`
`81
`
`57
`
`30
`
`57
`
`60
`
`53
`
`-
`-
`-
`Top 30 represent 54% of total company revenue
`
`• Sales depressed on 12 of top 30 products due to FX impact
`
`5
`
`Q2
`2015
`
`148
`
`102
`
`67
`
`84
`
`66
`
`74
`
`65
`
`59
`
`59
`
`26
`
`Q3
`2015
`
`220
`
`106
`
`92
`
`84
`
`73
`
`69
`
`66
`
`57
`
`54
`
`53
`
`Page 6 of 44
`
`

`

`Q3 2015 Top 30 Brands (2/3)
`
`($M)
`
`
`
`Product
`
`Q3
`2014
`
`Q4
`2014
`
`Q1
`2015
`
`Q2
`2015
`
`Q3
`2015
`
`11) Isuprel
`
`12) Uceris Tablets
`
`13) Lotemax*
`
`14) PureVision*
`
`15) Arestin
`
`16) Nitropress
`
`17) Apriso
`
`18) Retin A Franchise
`
`19) Elidel*
`
`20) Biotrue MPS*
`
`28
`25
`26
`Top 30 represent 54% of total company revenue
`
`* Sales depressed on 12 of top 30 products due to FX impact
`
`6
`
`-
`
`-
`
`35
`
`48
`
`30
`
`-
`
`-
`
`9
`
`22
`
`-
`
`-
`
`47
`
`49
`
`38
`
`-
`
`-
`
`17
`
`31
`
`72
`
`-
`
`43
`
`44
`
`32
`
`62
`
`-
`
`16
`
`26
`
`49
`
`24
`
`53
`
`44
`
`52
`
`64
`
`31
`
`19
`
`31
`
`29
`
`50
`
`46
`
`44
`
`42
`
`35
`
`35
`
`35
`
`32
`
`32
`
`31
`
`Page 7 of 44
`
`

`

`Q3 2015 Top 30 Brands (3/3)
`
`($M)
`
`
`
`Product
`
`Q3
`2014
`
`Q4
`2014
`
`Q1
`2015
`
`Q2
`2015
`
`Q3
`2015
`
`21) MoviPrep
`
`22) Cuprimine
`
`23) Cerave*
`
`24) Carac
`
`25) BioTrue ONEday*
`
`26) Ofloxacin Otic
`
`27) Ziana
`
`28) Artelac*
`
`29) Clindagel
`
`-
`
`11
`
`21
`
`14
`
`15
`
`1
`
`17
`
`25
`
`5
`
`-
`
`11
`
`27
`
`42
`
`15
`
`1
`
`23
`
`23
`
`7
`
`-
`
`8
`
`30
`
`26
`
`17
`
`1
`
`26
`
`19
`
`5
`
`30) Akreos Advanced Optics*
`20
`24
`22
`Top 30 represent 54% of total company revenue
`
`* Sales depressed on 12 of top 30 products due to FX impact
`
`7
`
`21
`
`8
`
`30
`
`18
`
`22
`
`6
`
`20
`
`24
`
`10
`
`24
`
`28
`
`27
`
`26
`
`23
`
`22
`
`21
`
`20
`
`20
`
`19
`
`19
`
`Page 8 of 44
`
`

`

`Salix Update
`
` Xifaxan TRx’s up 15% Q3’15 vs Q2’15, 25% Q3’15 vs Q3’14
`
` Uceris TRx’s up 20% Q3’15 vs Q3’14, Relistor TRx’s up 36% Q3’15 vs Q3’14, Apriso
`TRx’s up 7% Q3’15 vs Q3’14, Ruconest TRx’s up 29% sequentially Q2 to Q3
`
`
`
`
`Inventories reduced to 8-10 weeks; expect to reach our target of 4-6 weeks by end of
`year
`
`
`
` Xifaxan Integrated Professional and Consumer Campaign Launched October 5th
`
`TV
`
`PRINT
`
`DIGITAL
`
`8
`
`Page 9 of 44
`
`

`

`Sprout Update
`
` Addyi launched in U.S. on 10/17
`
` 148 reps in the field
`
` 8 Medical Science Liaisons (MSLs) hired
`
` Launching with prescribing information,
`submitting marketing materials to the
`Office of Prescription Drug Promotion
`(OPDP)
`
` No plans for direct to consumer (DTC)
`advertising at this time
`
` Cindy Whitehead has stayed on as CEO
`of Sprout
`
`9
`
`Cindy Whitehead
`
`Page 10 of 44
`
`

`

`Selected Emerging Market Performance
`
`Q3 Revenue
`$, millions
`
`Y/Y Same
`Store Sales
`Growth
`%
`
`Country
`
`China
`
`Russia
`
`~85
`
`~50
`
`23
`
`~0
`
`~0
`
`Brazil/Argentina
`
`~35
`
`10
`
`Page 11 of 44
`
`

`

`China Continues to Outperform
`
` Our China business is primarily a contact lens,
`solutions, and OTC eye drop market – all consumer
`pay
`
` Our products are priced for the middle class
`
` We have the leading market share position in contact
`lenses (contact lens as a category is growing 3% and
`we are gaining share by growing >20%)
`
` ~90% of products sold in China are manufactured
`outside China
`
` We are expanding our portfolio into aesthetics and
`skin care
`
`11
`
`Page 12 of 44
`
`

`

`Financial Summary
`
`Total Revenue
`
`Cost of Goods Sold (% of product sales)
`
`SG&A (% of total revenue)
`R&D Expense
`
`Operating Margin (% of total revenue)
`(excluding amortization)
`Cash EPS (Reported)
`
`GAAP Cash Flow from Operations
`Adjusted Cash Flow from Operations
`Fully Diluted Share Count
`
`
`
` Q3 2014
` $2,056M
`
`Q4 2014
`$2,280M
`
`Q1 2015
` $2,191M
`
`Q2 2015
` $2,732M
`
`Q3 2015
` $2,787
`
`
`
`
`
`
`
`26%
`
`24%
`$59M
`
`47%
`$2.11
`
`$619M
`$771M
`341M
`
`24%
`
`23%
`$59M
`
`
`
`
`
`50%
`$2.58
`
`$816M
`$624M
`342M
`
`25%
`
`26%
`$56M
`
`47%
`$2.36
`
`$491M
`$708M
`343M
`
`23%
`
`25%
`$81M
`
`49%
`$2.56
`
`$411M
`$773M
`351M
`
`22%
`
`24%
`$102M
`
`50%
`$2.74
`
`$737M
`$865M
`351M
`
`12
`
`Page 13 of 44
`
`

`

`Cash Flow (Q1 2014 to Q3 2015)
`
`2014
`Q1 Q2 Q3
`376
`619
`484
`
`2015
`Q3
`Q1 Q2
`Q4
`816* 491
`411 737
`
`636
`
`500
`
`771
`
`624
`
`708
`
`773 865
`
`GAAP cash flow from
`operations
`
`Adjusted cash flow
`from operations
`
`Adjusted earnings
`
`600
`
`651
`
`719
`
`881
`
`809
`
`897 961
`
`Cash conversion
`
`106%
`
`77%
`
`107%
`
`71% 88% 86% 90%
`
`*Q4 2014 included a one-time $287M gain from the sale of Allergan shares
`13
`
`Page 14 of 44
`
`

`

`Salix Inventory and Drawdown
`
`Net Sales (including IBS-D)
`
`Inventory Reduction
`
`Net Sales Adj. for Inventory
`Reduction
`
`Actual
`Q2
`$313M
`
`$141M
`
`$454M
`
`Actual
`Q3
`$461M
`
`Estimated
`Q4
`~$600M
`
`$98M
`
`~$100M
`
`$559M
`
`~$700M
`
`Beginning Months on Hand
`
`Ending Months on Hand
`
`4 - 5
`
`3 - 3.5
`
`3 - 3.5
`
`2 - 2.5
`
`2 - 2.5
`
`1 - 1.5
`
` Expect to reach ~4-6 weeks target by year end
` Increasing full year Salix net sales estimate from
`$1.20B to ~$1.35B
`
`14
`
`Page 15 of 44
`
`

`

`Balance Sheet Update
`
` Liquidity position at end of Q3
` $1.5B undrawn revolver
`
` $1.4B of cash
` Cash and revolver to fund transactions closed in
`October
` Free cash flow will be used for a combination of debt
`paydown and general corporate purposes
` Committed to debt paydown beyond the mandatory
`amortizations required by term loans
` We remain committed to getting net leverage to <4.0x
`adjusted pro forma EBITDA by the end of 2016
`
`
`15
`
`Page 16 of 44
`
`

`

`Increasing 2015 Q4 and Full Year
`Guidance
`Previous Q4
`2015
`$3.2 - $3.4B
`
`New Q4 2015 Previous full
`year
`$10.7 - $11.1B
`
`$3.25 - $3.45B
`
`New full year
`2015
`$11.0 - $11.2B
`
`Revenues
`
`Cash EPS
`
`$3.98 - $4.18
`per share
`
`$4.00 - $4.20
`per share
`
`$11.50 - $11.80
`per share
`
`$11.67 - $11.87
`per share
`
`NA
`
`NA
`
`>$3.2B
`
`>$3.35B
`
`Adj. Cash
`Flow from
`Operations
`
` Organic growth of ~10% (same store) expected Q4
` We expect to achieve double-digit organic growth in 2016
` We are reaffirming our expectations to exceed $7.5B EBITDA in 2016
` We will provide 2016 guidance on Jan 7, 2016
`
`
`See Note 1.
`
`16
`
`Page 17 of 44
`
`

`

`Reflections on our Strategy (1/2)
`
` Our mission remains the same – we will always put patients and physicians first, while taking our
`responsibility for our employees and the communities we work in very seriously
`
` We will remain shareholder friendly – we know who our owners are, we listen to them, and work
`hard for them every day
`
` Our focus will remain on:
`
` High growth markets: therapeutics areas and geographies
`
` Durable assets
`
` Concentrated specialist populations
`
` Segments where physician education matters
`
` Consumer pay/commercial insurance reimbursement
`
` Remaining diversified where no one product or small set of products disproportionately impacts
`our earnings
`
` As our portfolio has shifted over time to newer, higher growth assets, pricing will become a less
`important part of our growth
`
` Given the evolution of our product mix, it is likely that we will pursue far fewer, if any, transactions
`that are focused on mispriced products
`
` Our Neuro & Other segment is comprised of more than 50 products -- primarily tail assets from
`acquisitions. Because we expect Neuro & Other will represent only ~10% of our business going
`forward, it is not core to our business or strategy and we have considered and are considering a
`spinoff/sale of the entire segment
`
`
`
`17
`
`Page 18 of 44
`
`

`

`Reflections on our Strategy (2/2)
`
` Due to our success in R&D – especially in the areas of dermatology, contact
`lenses, surgical, and OTC products – internal R&D will become more of an
`area of focus
`
` If our stock price remains at current levels, share repurchases will be seriously
`considered
`
` Our strategy will remain agile and flexible in response to an ever-changing
`world
`
`18
`
`Page 19 of 44
`
`

`

`Questions from Investors
`
`1. How much of Valeant’s organic growth comes from price vs.
`volume (looking back and looking forward)?
`
`2. What is your approach to U.S. drug distribution?
`
`3. How does Valeant work with specialty pharmacies and what is
`Valeant’s relationship with Philidor?
`
`4. Why did Valeant’s General Counsel send a letter inquiring
`about the $69M owed to Valeant by R&O pharmacy?
`
`5. How does Valeant ensure patients have access to its products?
`
`6. What is the status of recent government inquiries and how do
`you manage compliance, legal, and regulatory matters?
`
`19
`
`Page 20 of 44
`
`

`

`1. How much of Valeant’s organic growth comes
`from price vs. volume (looking back and looking
`forward)?
`
`20
`
`Page 21 of 44
`
`

`

`2015 Valeant Price Volume Growth
`
`2015 % of
`business
`%
`
`Q3 2015
`Unit volume
`Net realized
`growth
`price change
`%
`%
`
`2015 YTD
`Unit volume
`Net realized
`growth
`price change
`%
`%
`
`Ex-U.S.
`
`U.S. Contact lens,
`Surgical, Consumer,
`Solta, Obagi
`
`U.S. Branded
`Pharmaceuticals
`
`U.S. Generics
`
`39
`
`14
`
`43
`
`4
`
`4
`
`4
`
`(2)
`
`(2)
`
`4
`
`3
`
`(1)
`
`2
`
`19
`
`15
`
`17
`
`24
`
`(9)
`
`5
`
`(10)
`
`Total
`
`100
`
`8.2
`
`4.4
`
`8
`
`21
`
`6
`
`8
`
`Page 22 of 44
`
`

`

`Price Volume for U.S. Branded Rx
`Portfolio Over Time
`
`Organic growth
`
`20%
`
`41%
`
`34%
`
`2014
`
`2015 YTD
`
`2015 Q3
`
`From Rx volume
`
`From net realized
`price
`
`8%
`
`17%
`
`19%
`
`12%
`
`24%
`
`15%
`
`22
`
`Page 23 of 44
`
`

`

`U.S. Branded Rx Over Time
`
`YOY growth in prescriptions, %
`
`Avg. net realized price per script
`
`19%
`
`17%
`
`15%
`
`12%
`
`13%
`
`$329
`
`$323
`
`$317
`
`$360
`
`$269
`
`6%
`
`$281
`
`$254
`
`1%
`
`Q1 2014
`
`Q2 2014
`
`Q3 2014
`
`Q4 2014
`
`Q1 2015
`
`Q2 2015
`
`Q3 2015
`
`23
`
`Page 24 of 44
`
`

`

`2015 Q3 U.S. Branded Rx Revenue –
`Components of Growth
`
`Growth
`
`$682M
`
`19%
`
`$128M
`
`5%
`
`$33M
`
`15%
`
`10%
`
`$71M
`
`$914M
`
`Q3 2014
`
`Growth from
`Rx volume
`
`Q3 2015
`
`Growth from
`net realized
`price (generics
`available)
`
`Growth from
`net realized
`price (no
`generics
`available)
`
`24
`
`Page 25 of 44
`
`

`

`2015 YTD Price Actions for Top 10 U.S.
`Dermatology Products
`
`Gross
`pricing
`action
`%
`19.8
`9.9
`9.9
`9.9
`9.0
`9.0
`15.0
`19.3
`61.0
`0.0
`14.0
`
`Net realized
`price
`%
`2.1
`0.7
`3.2
`2.5
`2.4
`2.3
`1.7
`2.2
`0.8
`0.0
`1.7
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`
`Jublia®
`Solodyn®
`Elidel®
`Ziana®
`Acanya®
`Onexton®
`Zyclara®
`RAM .08®
`Atralin®
`Targretin® Caps
`Weighted average
`
`Revenue from these products represents ~62% of
`our U.S. Dermatology business
`
`Note: Reflects all price actions since January 1, 2015
`
`25
`
`Page 26 of 44
`
`

`

`2015 YTD Price Actions for Top 10 U.S.
`Ophthalmology Rx Products
`
`Gross
`pricing
`action
`%
`10.0
`10.0
`10.0
`10.0
`10.0
`10.0
`10.0
`10.0
`10.0
`10.0
`10.0
`
`Net realized
`price
`%
`4.6
`9.4
`9.1
`2.0
`8.7
`10.0
`9.2
`10.0
`10.0
`9.3
`7.1
`
`1
`2
`3
`4
`5
`6
`7
`8
`9
`10
`
`Lotemax Gel
`Prolensa
`Alrex
`Besivance
`Zylet
`Istalol
`Bepreve
`Zirgan
`Timoptic in Ocudose
`Vitrase
`Weighted average
`
`Revenue from these products represents ~86% of
`our U.S. Ophthalmology Rx business
`
`Note: Reflects all price actions since January 1, 2015
`
`26
`
`Page 27 of 44
`
`

`

`Price/Volume for Neuro & Other
`
`YTD Volume decline
`
`YTD Net realized price
`
`% of Neuro revenue with
`generic alternatives in
`market
`
`(7)%
`
`30%
`
`61%
`
`% of 2016 U.S. business
`
`~10%
`
`27
`
`Page 28 of 44
`
`

`

`Clarifying Valeant Price Increases – The
`Facts
`
`Total products in portfolio
`
`Number of products with
`price increases
`Share of portfolio
`
`Average WAC increase*
`
`Average net realized
`increase
`
`Recent Deutsche
`Bank report
`69
`
`Actual U.S.
`Branded Pharma
`156
`
`56
`
`81%
`
`66%
`
`n/a
`
`85
`
`54%
`
`36%
`
`24%
`
`* Unweighted (total WAC increases ÷ total # products)
`Note: Reflects all price actions between January 1, 2015 – September 29, 2015
`Source: 2015 Industry Update Drug pricing perspectives: Page 7 Figure 11
`Deutsche Bank Markets Research, Deutsche Bank Securities Inc.
`29 September 2015, Gregg Gilbert
`
`28
`
`Page 29 of 44
`
`

`

`Price vs. Volume Disclosure Comparison
`
`Products
`covered
`
`Type/level of
`disclosure
`
`# of top 15
`Pharma
`companies
`
`Valeant’s
`disclosure
`
`Full portfolio
`
`Selective
`products
`
`Quantitative
`
`Qualitative
`
`Quantitative
`
`Qualitative
`
`4
`
`1
`
`6
`
`4
`
`current
`
`historic
`
`29
`
`Page 30 of 44
`
`

`

`Valeant’s Evolving Portfolio
`
`2015 % of
`business
` %
`
`2016 % of
`business
` %
`
`Ex-U.S.
`
`U.S. Contact lens,
`Surgical, Consumer,
`Solta, Obagi
`
`U.S. Generics
`
`U.S. Branded
`Pharmaceuticals
`
`U.S. Neuro
`
`Total
`
`39
`
`14
`
`4
`
`27
`
`16
`
`100
`
`30
`
`~30
`
`~15
`
`~5
`
`~40
`
`~10
`
`100
`
`Page 31 of 44
`
`

`

`2. What is your approach to U.S. drug distribution?
`
`31
`
`Page 32 of 44
`
`

`

`Valeant’s U.S. Drug Distribution Strategy
`
` Our drugs are available to all patients
`
`
`
` Over 90% of our U.S. pharmaceutical products are
`available through the big 3 distributors
`
`
`
` Our distribution is not designed to restrict access to
`our products
`
`32
`
`Page 33 of 44
`
`

`

`3. How does Valeant work with specialty
`pharmacies and what is Valeant’s relationship
`with Philidor?
`
`33
`
`Page 34 of 44
`
`

`

`Specialty Pharmacy (1/2)
`
` We have viewed our relationship with Philidor and our other specialty
`pharmacies as proprietary and as one of our competitive advantages
`
` Similar to many pharmaceutical companies in the U.S., an increasing
`percentage of our revenue is coming from products dispensed through multiple
`specialty pharmacies
`
` We find specialty pharmacies improve patients’ access to medicines at an
`affordable price and help ensure physicians are able to prescribe the
`medications they believe most appropriate for their patients
`
` In almost all cases, our inventory with specialty pharmacies and the title for our
`medicines only transfer to the pharmacy when the actual prescription is filled –
`this significantly reduces our distribution fees and product returns. Less than
`5% of our U.S. channel inventory sits in the specialty pharmacy channel
`
` Philidor, one of our specialty pharmacy partners, provides prescription services
`to patients across the country, and provides administrative services for our co-
`pay cards and is a dispensary that fills prescriptions. We have a contractual
`relationship with Philidor and late last year we purchased an option to acquire
`Philidor
`
`34
`
`Page 35 of 44
`
`

`

`Specialty Pharmacy (2/2)
`
` Based on a VIE (variable interest entity) assessment in accordance with ASC
`810, we consolidate the financials of Philidor. Inventory held at Philidor
`remains on Valeant’s books and is not included in the specialty pharmacy
`channel inventory
`
` For many of our dermatology products, many of our specialty pharmacies,
`including Philidor, dispense Valeant medications before adjudication of the
`reimbursement may be finalized. Patients get their medicines more quickly
`and Valeant takes the risk for non-reimbursement
`
` We understand that Philidor:
`
` Provides services under our programs for commercially insured and cash-
`paying claims only. Any claim that would be reimbursed in whole or in part by
`government insurance is not eligible for our co-pay subsidy programs
`
` Does not restrict prescriptions it fills to any particular manufacturers
`(including Valeant)
`
` Dispenses generic products as specified in patient’s prescription or as
`requested by patient
`
`35
`
`Page 36 of 44
`
`

`

`4. Why did Valeant’s General Counsel send a
`letter inquiring about the $69M owed to Valeant
`by R&O pharmacy?
`
`36
`
`Page 37 of 44
`
`

`

`Why did Valeant Send a Letter to R&O
`Pharmacy?
`
` R&O is in one of the specialty pharmacies in our network
`
` Valeant shipped approximately $69 million at WAC,
`approximately $25 million in net revenue to Valeant
`
`
` R&O sold a substantial amount of Valeant product. Any
`products R&O dispensed to patients were recognized as our
`revenues and are reflected in our receivables. Any products
`still held by R&O are reflected in our inventory
`
`
` R&O is improperly holding significant amounts it received from
`payers
`
`
`
`
`37
`
`Page 38 of 44
`
`

`

`5. How does Valeant ensure patients have access
`to its products?
`
`38
`
`Page 39 of 44
`
`

`

`Valeant’s Patient Access
`
` Our patient assistance programs are administered by a reputable
`third party (redacted)
`
` We fund foundations with multiple donors – and the foundations
`determine their eligibility requirements
`
` Eligibility for our commercial access programs is limited to patients
`not covered by government programs
`
`Total spend on patient assistance programs
`$, millions
`
`+128% p.a.
`
`544
`
`635
`
`~1,000
`
`331
`
`53
`
`2012
`
`2013
`
`2014
`
`39
`
`2015E
`
`2016E
`
`Page 40 of 44
`
`

`

`6. What is the status of recent government inquiries
`and how do you manage compliance, legal, and
`regulatory matters?
`
`40
`
`Page 41 of 44
`
`

`

`Recent Government Inquiries
`
` On October 14, 2015, we responded to a letter from Senator
`Claire McCaskill (Democrat-Missouri)
`
` The letter addressed the history of Nitropress and Isuprel, the
`reimbursement process for hospital procedures involving
`Nitropress and Isuprel, the analysis and reasons underlying
`Valeant's pricing decisions, and Valeant's programs designed to
`improve patient access, among other topics
`
` We are beginning outreach to hospitals where the impact of a
`price change was significantly greater than the average
`
` We received a subpoena from the U.S. Attorney's Office for the
`District of Massachusetts and a subpoena from the U.S.
`Attorney's Office for the Southern District of New York
`
` We intend to cooperate with the investigations
`
`41
`
`Page 42 of 44
`
`

`

`Approach to Compliance & Legal
`
` Valeant’s compliance program is consistent with Office of the Inspector General’s
`(OIG) guidance on the operation of an effective compliance program
`
` Recently concluded 5-year Corporate Integrity Agreement, which required that we
`have (1) written policies and procedures and systems in place consistent with OIG
`guidance on the operation of an effective compliance program, (2) significant
`training related to these policies and procedures and all applicable laws, (3) a
`functioning compliance committee and appropriate oversight of our compliance
`function, (4) an annual audit by an independent review organization to review our
`systems, policies and procedures as well as our transfers of value to healthcare
`providers and sample and sales call activity
`
` We filed 5 annual reports with OIG which included the reports of the Independent
`Review Organization (Navigant). Our fifth and final report was filed in early 2015
`
` In connection with the B+L acquisition, we assumed compliance commitments made
`to the Department of Justice for the B+L business
`
` Includes requirements to effectively maintain a compliance program consistent
`with the OIG Guidance on an Effective Compliance Program
`
` Requires that we certify compliance annually to the Department of Justice, which
`has been made.
`
`42
`
`Page 43 of 44
`
`

`

`Valeant
`Pharmaceuticals
`International, Inc.
`
`Q3 2015 Financial Results
`October 19, 2015
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Page 44 of 44
`
`