J. Michael Pearson
| J. Michael Pearson | |
|---|---|
| Born | 1959 London, Ontario, Canada |
| Residence | New Vernon, New Jersey, US |
| Nationality | Canadian |
| Alma mater |
Duke University (BS & BSE) University of Virginia (MBA) |
| Known for | former CEO of Valeant Pharmaceuticals |
| Net worth | US$175 Million (March 2016) |
| Spouse(s) | Christine Pearson |
| Children | 4 |
J. Michael Pearson (born 1959) is a Canadian American pharmaceutical company executive, who was the chairman and CEO of the publicly traded Laval-basedValeant Pharmaceuticals International, until he was replaced in April 2016 by Joseph C. Papa. On April 27, 2016 Pearson, Bill Ackman and Howard Schiller appeared before the United States Senate Special Committee on Aging to answer concerns about the repercussions for patients and the health care system faced with Valeant's business model.
Pearson was born in London, Ontario, Canada, the son of a father who worked for Bell Canada who "helped design the phone lines in some of the small towns". Pearson moved to New Jersey with his family when he was 12 years old. Pearson's father worked at McKinsey & Company, the global consulting firm.
In 1981, Pearson obtained a BS and BSE from Duke University, graduating Summa Cum Laude and Phi Beta Kappa. He then earned an MBA from the University of Virginia's Darden Graduate School of Business Administration.
Pearson joined McKinsey & Company, where his father worked, in 1985 and worked as consultant there for 23 years, rising to Director.
Before taking over as Valeant CEO in 2008, Pearson worked for them as outside consultant in 2007. In 2008, Pearson began implementing his strategy by selling off portions of Valeant's European business to Meda AB, In 2010, Valeant and the Canadian-headquartered company Biovail agreed to merge, with the resulting company being called Valeant and being headquartered in Ontario Pearson was named CEO of the new company and then, in March 2011, he was appointed chairman of the board. The Biovail merger, by headquartering the company in Canada, allowed the company to reduce its tax rate to approximately 5% Later, Valeant would be called upon to testify before Congress, along with Burger King, about how its tax inversion potentially gave it a competitive advantage over American companies. A New York Times article credits Pearson's "tough tactics" for the financial success of the "fast-growing" Valeant Pharmaceuticals International. The article also highlights the criticism that Valeant Pharmaceuticals controversial strategy has attracted from patients finding themselves unable to afford drugs after price hikes by Valeant. This pricing controversy was originally raised when Senator Bernie Sanders and Representative Elijah Cummings sent a letter to Valeant seeking justification for huge price increases it took on two life-saving drugs, Nitropress and Isuprel. The company had raised the price of Isuprel by almost six times and the price of Nitropress by over three times. Shortly after, Democratic members of Congress attempted to subpoena Valeant for this information. As CEO, Pearson's business strategy was to eliminate "risky and inefficient" Research and Development to the equivalent of "only 3 percent of its sales" whereas "traditional big drug companies spend 15 to 20 percent of sales on research and development". Instead he acquired dozens of companies with existing drugs and saved money by laying off their employees. This model worked and Valeant's stock price rose by over 1000%. By 2013, under Pearson's tenure, Valeant was the largest pharmaceutical company in Canada. By 2015 Pearson had "nearly $3USD billion in stock and options" in Valeant, with "the potential to own hundreds of millions of dollars more." Since Pearson became CEO Valeant shares "have returned more than 2,300 per cent" making Valeant the "most valuable" and the best performer on the . By July 2015 Valeant's market capitalization was $CDN 113-billion which is about $4-billion more than the Royal Bank of Canada. However, by October of that same year, following negative press about its pricing tactics and a particularly negative analyst report from Citron Research, Valeant's stock dropped to approximately $CDN 78-billion.
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