J. Michael Pearson, Valeant Pharmaceuticals
By VITA REED
J. Michael Pearson has been at Valeant Pharmaceuticals International for less than a year. But he left his mark on the Aliso Viejo drug maker in 2008.
Since Pearson joined as Valeant’s chief executive in February, he’s sold off global units, cut jobs and narrowed the company’s focus to drugs for the nervous system and skin ailments.
Wall Street likes Pearson’s work so far.
Valeant shares ended 2008 up about 85% with a market value of $1.8 billion. The stock was one of the best locally and even nationally last year, with a 40% drop in the Standard & Poor’s 500 index.
In a recent article in the Wall Street Journal’s online edition, Steven Kaplan, a professor at the University of Chicago Booth School of Business, nominated Pearson as one of the best chief executives of 2008.
But Pearson, a turnaround specialist who came from McKinsey & Co., still has work
to do.
The challenge now is spurring growth at Valeant with new drugs and acquisitions.
In November, Valeant reported what it called encouraging mid-stage clinical trial results for a hepatitis C drug. The company is looking to taribavirin to replace fading flagship ribavirin, which now faces generic rivals.
The company hopes to license taribavirin to a big drug maker.
In October, Valeant struck deals with GlaxoSmithKline PLC for an epilepsy drug under development as well as for a seizure drug.
Pearson also made acquisitions.
Last month, Valeant paid $285 million for Dow Pharmaceutical Sciences Inc., a Northern California maker of drugs to treat acne and other skin conditions.
In November, Valeant bought Australia’s DermaTech Pty Ltd. for $12.2 million.
In October, Valeant acquired skin drug maker Coria Laboratories Ltd. of Texas for $95 million.
When Pearson wasn’t striking deals, he was paring operations.
In August, Valeant sold its European subsidiaries to Meda AB of Sweden for $392 million.
Earlier, the drug maker sold off its Asian subsidiaries for $37.9 million to Singapore’s Invida Pharmaceutical Holdings Pte Ltd.
Valeant also cut more than half of its workforce and replaced nearly all of its senior management team.
Mario Costamagna Fuel Systems Solutions
By Dan Beighley
While most companies were playing defense last year, Santa Ana’s Fuel Systems Solutions Inc. was ramping up.
Fuel System’s hefty sales growth and a run-up on Wall Street earned Chief Executive Mario Costamagna a mention in our businessperson of the year coverage.
For the nine months through September, Fuel Systems’ sales were $298 million, up 60% from a year earlier. Net income was $23 million, up from $1 million a year earlier.
The results helped make Fuel Systems the best major stock in Orange County last year. Its shares ended the year up about 140% on a market value of $525 million.
Fuel Systems makes kits that allow vehicles to run on propane and natural gas. Most of its business is in Europe, where Costamagna lives in Italy.
While Fuel Systems had a great year, we’re waiting to see if the company has staying power.
Fuel Systems runs Impco Technologies Inc., a maker of engine parts for propane and natural gas vehicles, and Italy’s BRC Gas Equipment SRL, which makes kits for converting vehicles from gasoline to alternative fuels.
Sales in Europe, where gas prices are higher because of taxes, have driven growth, according to Chief Financial Officer Bill Larkin.
The kits haven’t had the same impact in the U.S., where ethanol and hydrogen have been the preferred alternative fuels.
Instead, U.S. sales for the company have focused on small fleets of vehicles like forklifts and buses where they’re considered economical.
But “revenue for the industrial side of the business has been historically flat,” Larkin said.
In Santa Ana the company has 200 workers, which is about a third of the size of its operation in Italy.
One of the reasons the company has done better in Europe as well as Australia is that the governments there have done a better job of promoting propane and natural gas, according to Larkin.
The cost to convert a vehicle is $5,000 to $10,000 for natural gas and about $2,000 for propane, which makes economic sense in Europe.
Natural gas costs two-thirds less to run, while propane costs a little less than half as much, according to Larkin.
Competitors include Italy’s Landi Renzo SPA, which has 40% of the market versus Fuel System’s 35%, according to Larkin. There are also a number of smaller players, he said.
It’s unclear how well the company’s sales may fair next year with so much of its success depending on a higher price for gasoline.
Government incentives for alternative fuels and investments in alternative fuel service stations are also key factors.
