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CEO Daily: Monday, October 26

Valeant Pharmaceuticals will attempt to defend itself in a phone call with investors this morning at 8 a.m.

 

We’ll be interested to hear what they have to say. The company’s stock has been cratering since Citron Research published a report last week saying Valeant uses its relationship with specialty pharmaceutical companies, including a firm called Philidor, to inflate revenue artificially. Citron calls it a “pharmaceutical Enron.” The Wall Street Journal has more on the story this morning.

 

But whatever happens this morning, we already know this: Valeant is one of the worst things to happen to the pharmaceutical business in a long time. The company has routinely bought up drug companies, jacked up prices by obscene amounts, and cut research and development. That may have been a good thing (temporarily) for shareholders. But it has undercut the rationale for the U.S. policy of prohibiting the government from negotiating drug prices. Such price controls would be a bad thing, the argument goes, because they would lead to less research and innovation. Valeant puts a lie to the argument.

 

 

Valeant already can take credit for further undermining public trust in business, and increasing pressure for heavy handed government solutions to our health care mess.

 

More news below.

 

 

Alan Murray
@alansmurray
alan.murray@fortune.com

Top News

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Around the Water Cooler

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Facebook’s tough sell in India

Facebook is in the process of trying to bring the Internet to the four billion people who lack it, a project called Internet.org that isn’t exactly a roaring success yet. The goal is to initially show users what the Internet can be used for with basic free services, but in India there are complaints that the project is a way to get people to use Facebook and sign up for paid plans from the social media giant’s cellphone carrier partner Reliance Communications. CEO Mark Zuckerberg has made several overtures to win over the Indian public, including a visit to New Delhi this week to take questions from Facebook’s Indian users. New York Times (subscription required)

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