Preview

Valeant Pharmeceuticals Case Study

Good Essays
Open Document
Open Document
1329 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Valeant Pharmeceuticals Case Study
2.0 DISCUSSION
2.1 Accounting scandals incurred by the organization (s) One of the multinational pharmaceutical companies is Valeant Pharmeceuticals International, Inc. in Laval, Canada which produces a wide range of pharmaceutical products in the field of dermatology, eye health, neurological and generic brands (VALEANT Pharmaceuticals International, Inc., 2018). However, this company was involved in financial statement fraud and also corruption in 2016 which there was deviation by offering cheats and using secret shell companies and hidden email addresses by Andrew Davenport and former executive Valeant, Gary Tanner at the cost of investors at the Valeant drug maker as indicated by the authorities (Egan, 2016). However, their activities
…show more content…
Firstly, Valeant said it recorded and recognized the revenue when the sales have made to Philidor. Then, it said it changed the approach and began to consolidate Philidor inventory on Valeant’s balance sheet and delayed recognition of revenue until sales were made to the final customers (McKenna, 2016). The revenue had said to be double counted when Valeant recognized the revenue again after consolidation. Valeant Pharmaceuticals promised to make amendment of their earnings for two years and this might be the possible abuse of revenue recognition. Moreover, Philidor’s financial statements or results were consolidated with Valeant’s, but Valeant never disclose the details to the people (Lu, 2017). Valeant Pharmaceuticals’ auditor, PricewaterhouseCoopers was then been given the responsibility to double-check their numbers and disclosures of financial statements at the end of February (McKenna, 2016). Besides, Valeant Pharmaceuticals had almost $30 billion of bad debt and involved in accounting fraud related to the Philidor Rx Services. This accounting fraud has been under investigation by the U.S attorney’s office in New York (Keown, 2017). After that, Micheal Pearson and Howard Schiller were caught for investigation in the Philidor scandal (Keown, …show more content…
Valeant Pharmaceuticals International Inc was believed to build on a secret relationship with the speciality pharmacy (Mangan, 2016), Philidor Rx Services and this pharmacy was fully controlled by Valeant. Philidor Rx Services was a speciality mail-order pharmacy formed with Valeant’s assistance (Raymond, 2016) and it helped Valeant to sell high price medications to the patients in order to boost its drug sales. In 2014, Tanner tends to promote Philidor to Valeant executives, J.Michael Pearson to raise his concerns that Philidor can start working with rival drug makers and able to reduce the drug maker’s dependency on the pharmacy (Silverman, 2016). As a result, Valeant agreed to purchase Philidor in December 2014. The deal was successful and Valeant made a payment of $100 million to Philidor’s owners. Tanner helped Davenport earned $40 million in proceeds and as a result, Davenport transferred $10 million to Tanner. The payments made to Tanner were allegedly “laundered” through a series of shell company bank accounts (Silverman, 2016). Their action which illegally uses Philidor as a tool for personal profit has been charged with fraud. Their action was being alleged for illegally converted Valeant shareholder money into their own personal

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Trueblood Case 09 2

    • 804 Words
    • 2 Pages

    Company XYZ is an unrelated third-party private equity investor with no prior relationship or business operations related to Pharmagen…

    • 804 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    In recent years, there has been an expansion of product development activities for colorectal cancer through a number of new public-private partnerships (PPPs). However, there is a lack of credible drug leads to feed the development pipeline of these PPPs and there is a great need for new drug discovery initiatives to produce such leads. There is a need to go beyond lead discovery and identify drug candidates that can be further developed.…

    • 1870 Words
    • 8 Pages
    Good Essays
  • Powerful Essays

    The Medicines Company

    • 868 Words
    • 5 Pages

    The Medicines Company Case Write-Up: Terence Cho, Felipe Duarte, Aleks Loiko, Robert Shaw, and James Wang…

    • 868 Words
    • 5 Pages
    Powerful Essays
  • Good Essays

    Livent's Fraud Summary

    • 923 Words
    • 4 Pages

    Drabinsky and Gottelieb, and their constituents were going to ensure their debut on Broadway by any means necessary. Ironically, the company created preventive controls that enabled them to continue committing the fraud while also concealing paper trails. Livent had a computer program designed than enabled the perpetrators to make desirable adjustments without leaving paper or transaction trails. Therefore, the company was able to manipulate financial records to make the adjustments appear original. A common red flag among the three fraud schemes involving the understating of expenses and liabilities is the decrease in expense as a percentage of sales. If sales are decreasing, then the percentage of expenses should be increasing or decreasing when sales are increasing. Livent’s sales figures were increasing due to fictitious revenues and expenses were either being removed or deferred. In Livent’s case, the numbers would need to be compared to prior years and industry standards to ensure that expenses were not being omitted or revenues were not being overstated. In addition, decreasing current liabilities as a percentage of sales could result from efficiency or accounting irregularities. An auditor would need to review Livent’s disclosures for further guidance regarding how the current liabilities were handled as the decreases could be seen as positive. Increases to both the deferred costs or prepaid expenses as a percentage of sales and deferred assets to sales are signs that expenses are being capitalized and recorded improperly as assets. However, further research would be necessary in Livent’s case, therefore, comparing results to industry standards and researching disclosures would be beneficial. Livent was guilty of contradicting its accounting policy when the company decided to miscapitalize preproduction costs. A contradiction in financial statement…

    • 923 Words
    • 4 Pages
    Good Essays
  • Better Essays

    In 1995 Douglas Durand went to work for Tap Pharmaceuticals as vice- president of sales. Several months after starting at Tap Pharmaceuticals, Durand was in disbelief to find out that the company was bribing urologists to purchase the new Lupron drug for prostate cancer. Durand found the culture at Tap Pharmaceuticals to be in misalignment. In order for Durand to protect his good name, he began to document all his findings over a 6 year period and submitting the information to federal prosecutors. The documentation that Durand submitted to the federal prosecutors was so overwhelming that it caused Tap Pharmaceuticals to plead guilty to conspiring with doctors and cheating the government. As result of the guilty plead, Tap Pharmaceuticals paid…

    • 1920 Words
    • 8 Pages
    Better Essays
  • Good Essays

    Bristol Myers

    • 479 Words
    • 2 Pages

    Bristol-Myers Squibb and Sanofi-Aventis should have attempted to pay Apotex to prevent it from launching the generic drug. It seems that BMS only entered the agreement because they felt that Apotex could not get approval. BMS offered Apotex $60 million break-up fee if the agreement was rejected by the FTC (Baron, 2010). To offer such a high break-up fee meant that BMS was very certain of the denial by the antitrust. The deal offered was to prevent Apotex from launching their version of plavix.…

    • 479 Words
    • 2 Pages
    Good Essays
  • Powerful Essays

    LEG 500

    • 1991 Words
    • 6 Pages

    Pharmaceutical Company Forced to Pay $3 Billion Over Faking Research, Bribing Doctors | Health Impact News. [ONLINE] Available at http://healthimpactnews.com/2012/pharmaceutical-company-forced-to-pay-3-billion-over-faking-research-bribing-doctors/. [Accessed 15 August 2014].…

    • 1991 Words
    • 6 Pages
    Powerful Essays
  • Good Essays

    Imclone Business Ethics

    • 1049 Words
    • 5 Pages

    I chose to report upon the case study involving ImClone and Samuel Waksal’s deceitful practices involving selling personal shares of ImClone stock. Samuel Waksal knowingly participated in insider trading which involved selling his ImClone stock and then notifying his family of the impending refusal by the FDA for the approval of their first drug Erbitux.…

    • 1049 Words
    • 5 Pages
    Good Essays
  • Best Essays

    When London-based GlaxoSmithKline (GSK) paid a $750 million dollar settlement as part of a plea agreement that required it’s Cidra, Puerto Rico subsidiary SB Pharmco to plead guilty for knowingly selling contaminated medicine, it laid to rest any doubts that its business practices were in direct conflict with its commitment to both quality and to creating a strong ethical culture. There are, nevertheless, important issues that extend beyond the facts in evidence. This paper does not seek to re-litigate the government’s case against GlaxoSmithKline. It, instead, seeks to accomplish three basic goals: to offer insights into the failure of the Food and Drug Administration to carry out it’s post-approval mission which is to protect the public from unsafe drugs by enforcing best manufacturing practices; to explore the endemic failure of management at every layer to engage in ethical decision making; and finally to suggest measures that, if taken, might have prevented the mishandling of this matter by GlaxoSmithKline.…

    • 2531 Words
    • 11 Pages
    Best Essays
  • Satisfactory Essays

    In 2003 Biovail Corporation announced that it will miss its 3rd quarter earnings target by $25-$45 million, attributing $10-$15 million to a recent shipment loss. Being one of Canada’s largest publicly traded pharmaceutical companies with stock listed on both the Toronto and New York stock exchanges, the news raised concerns in the financial circles over the company’s accounting practices.…

    • 494 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Over the last several years, Canadians and Americans have witnessed a rash of accounting and financial fraud incidents, including the debacles at now-bankrupt WorldCom and Enron, the Martha Stewart stock scandal, and recently, the largest Ponzi scheme in history allegedly perpetrated by Bernard Madoff.…

    • 2537 Words
    • 11 Pages
    Powerful Essays
  • Powerful Essays

    HEARTS R US

    • 1477 Words
    • 6 Pages

    There are a couple of issues surrounding this case. First is an early-stage company that doesn’t have the financial stability and this might create trouble for further transactions. The only product that might be coming to the market still depends on a series of trials and the approval of the FDA. Since the company is just starting; all of its accounting transactions have being recorded to comply with the covenants of its outstanding debt. Furthermore they are not required to comply with SEC and are currently not doing so. Also theirs an issue of how to be done to…

    • 1477 Words
    • 6 Pages
    Powerful Essays
  • Good Essays

    The pharmaceutical giant and British drug maker, GlaxoSmithKline, has agreed to plead guilty and pay the government three billion dollars in a health care fraud settlement bought by the FDA. This is the largest settlement involving a pharmaceutical company in recorded history. GSK have admitted to committing three fraud charges. They promoted the off-label use of two anti-depressant drugs – Paxil and Wellbutrin. The two anti-depressants are not necessarily considered as bad medicine instead the GSK failed to apply for approval from the FDA. GSK broke the law when they marketed the drug for a non-approved use under the FDA. The second charge that was made against GSK was when they held back data and made unsupported claims regarding its diabetes drug Avandia. The third charge that was made against GSK was when their sales team used inappropriate and illegal marketing tactics to get the doctors to prescribe their drugs. In addition to using illegal marketing tactics, they offered doctors free spa privileges, trips to Jamaica and Bermuda, and concert tickets. The three criminal charges involved Paxil, Wellbutrin and Avandia and included a criminal fine of $1 billion. The remaining $2 billion involves fines in connection with a civil settlement over the sales and marketing practices of the blockbuster asthma drug Advair and several other drugs (NY Times). GSK have not only violated the rules made by the FDA but also committed basic unethical behavior. Even though the $3 billion may seem like a large amount, it represent only a small portion of what Glaxo made on the drugs. According to IMS Health, Glaxo’s diabetes drug Avandia racked up to $10.4 billion in…

    • 872 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Biopharma Case Study

    • 1265 Words
    • 6 Pages

    Optimization was performed using Excel to determine what production/distribution allocation would minimize the overall cost while accounting for fixed and variable cost of production, as well as transportation and import costs. My particular optimization determined that Japan should be idled on production of both chemicals while Germany (Europe) should be idled on production of Relax. The following shows the amount of each chemical that each region should make as well as plant capacity in millions of kg.…

    • 1265 Words
    • 6 Pages
    Powerful Essays
  • Powerful Essays

    Almost every aspect of the complexity of the merger can be explained through Rhône-Poulenc’s financial constraints. RP’s motives to acquire Rorer were to create crucial capital for its own strategic entry into pharmaceuticals. RP could not buy Rorer either in cash or shares due to the following factors:…

    • 3257 Words
    • 14 Pages
    Powerful Essays