Valeant Pharmaceuticals International, Inc. (NYSE:VRX) Q4 2017 Earnings Conference Call Transcript

Feb 28, 2018 • 08:00 am ET


Valeant Pharmaceuticals International, Inc. (NYSE:VRX) Q4 2017 Earnings Conference Call Transcript


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Joseph C. Papa

higher organic revenue growth during the last three quarters of 2017.

In addition to growing our core businesses, another important area of focus throughout the year has been advancing our new product pipeline. We launched more than 100 products globally last year, including AQUALOX contact lenses in Japan, and Biotrue ONEday lenses for astigmatism in Europe. In the US, we launched VYZULTA and SILIQ. We received FDA approval for LUMIFY, FDA acceptance to file for DUOBRII, and the clearance for next-generation Thermage System.

At the same time we've continued to make progress in our efforts to strengthen the balance sheet. As of today, we have reduced total debt by more than $6.7 billion since the end of the first quarter of 2016. Our legal team has done an outstanding job reducing legal liabilities facing the Company. From the beginning of 2017 through today, we achieved dismissals, settlements or other positive outcomes in more than 80 litigations and investigations, all of which related to historical matters. Notably, we agreed to resolve the Allergan securities litigation, subject to court approval, which was an important milestone to resolve. We believe that our insurance policies are sufficient to cover the settlement costs and legal fees.

In a recent development, we have agreed to resolve the SOLODYN antitrust litigation with a class settlement amounting to $58 million and which will be remaining though subject to court approval. Also, we simplified the supply chain by reducing a number of manufacturing sites we operate by 23%. And we're in the process of discontinuing more than 1,900 SKUs. These changes have resulted in cost improvements of approximately $90 million in 2017 alone. Delivering on our commitments have been and continues to be a major focus of the team.

Moving now to Slide 6. First, I want to call out the four sequential quarters of mid-single-digit organic revenue growth in the segment. As you can see from the chart on the right, this sustained growth follows a declining to relatively flat period in the prior year. These results were led by strong sales in Global Consumer, Global Vision Care and our International business. I also want to highlight the growing e-commerce presence of the Global Consumer and Vision Care business. On Amazon, B+L grew by 58% in 2017 compared to 2016. And given the strength of the B+L brand in China, we were excited to see that Alibaba sales spiked about 35% on Singles' Day, which is a quarter four Chinese shopping holiday.

Finally, after launching VYZULTA at the end of 2017, we're excited that this proven treatment is now available to lower intraocular pressure for patients with glaucoma. The global glaucoma market represents a $6 billion opportunity, and is expected to grow at a compound annual growth rate of 15%, eventually accounting for more than $11 billion in revenue opportunity by the end of 2020. As an update, we also recently learned that Express Scripts has agreed to begin coverage of VYZULTA under an unrestricted access position on