J. Michael Pearson went shopping in 2009 as part of his ongoing rebuilding of Aliso Viejo-based Valeant Pharmaceuticals International.
The drug maker’s chief executive spent $395 million last year to buy three skin care companies and products from a fourth.
The deals followed 2008’s $115 million in skin care deals.
The moves are designed to increase Valeant’s dermatology revenue from $300 million in 2009 to $500 million this year.
Dermatology could make up 55% of Valeant’s projected $900 million in 2010 sales, up from 37% in 2009. The company also makes neurology and antiviral drugs.
Pearson has been building up Valeant’s skin products to diversify the company’s revenue. Recent deals have brought prescription drugs covered by insurers and others that patients pay for themselves.
Wall Street has cheered the moves. Valeant’s shares were up 40% in 2009 with a market value of $2.6 billion.
Pearson, a former executive at turnaround consultant McKinsey & Co., became Valeant’s boss in early 2008. He replaced Timothy Tyson, who had been Valeant’s chief since 2005 and came under fire for losses and a lack of direction.
Valeant got its start as ICN Pharmaceuticals Inc. under autocratic founder Milan Panic, who was ousted by shareholders in 2002.
Acquisitions are the second part of Pearson’s strategy. He spent much of 2008 cutting jobs and selling off unwanted operations.
That boosted profits but left some company watchers wondering how Pearson would spur growth.
He started 2009 by wrapping up a deal struck in 2008: a $285 million buy of Dow Pharmaceutical Sciences Inc., a Northern California maker of drugs to treat acne and skin conditions.
In September, Valeant spent $69 million and issued 162,500 shares for Australia’s Private Formula International Holdings Pty Ltd., a maker of skin products sold without prescriptions.
A month later, the company paid $18 million to buy the rights to several skin drugs from an undisclosed Polish drug maker.
In December, Valeant acquired Quebec’s Laboratoire Dr. Renaud, a maker of cleansers, toners, moisturizers and other products sold at spas and clinics, for $21.7 million.
Pearson has “built a significant dermatology business,” said Gary Nachman, an analyst with Boston-based investment bank Leerink Swann LLC.
2009 saw another deal and milestones for Pearson.
In July, Valeant paid $33 million for Mex-ico’s Tecnofarma SA de CV, a generic drug maker.
In November, Valeant came out with a generic drug to treat irritable bowel syndrome. March saw the debut of Acanya, a gel for treating mild to moderate acne.
In October, Valeant submitted U.S. and European applications for retigabine, its epilepsy drug candidate.
The company is working with Britain’s GlaxoSmithKline PLC on developing the drug, which Valeant acquired in 2005.
In September, Pearson got a nod from the Wall Street Journal for his pay package. The story called his compensation a model for all public companies.
As a condition of accepting the job, Pearson was required to buy at least $3 million in Valeant stock, forgo routine stock grants and hold shares for a long period of time.
Pearson also dealt with a lingering bit of operational restructuring in 2009. Valeant exercised an option to end a lease for its Aliso Viejo corporate headquarters in late 2011.
Earlier cuts made the headquarters too large and costly for Valeant.
Valeant had 190 workers as of September, down from about 500 workers three years ago.
