No, you don't have double vision. Valeant Pharmaceuticals ($VRX) did buy two dermatology operations last week. First came Sanofi's ($SNY) Dermik unit, which Valeant agreed to acquire for $425 million. Then, at the end of the week, Valeant said it had made a $345 million deal for Janssen Pharmaceuticals' skincare business. With these two deals--and two others made earlier this year--Valeant will count about $1 billion in dermatology revenues.
And don't expect the buys to stop. Valeant CEO J. Michael Pearson tells Reuters he wants to amass the world's biggest skincare business within 5 years. Doing that will definitely require more deals. "We're ambitious in many ways," Pearson told the news service. "We just want to be a lot bigger than anyone else."
Reaching the top spot in the dermatology market is doable because it's so fragmented, Pearson says. These days, the business is full of small players. Big Pharma companies--such as Sanofi and Johnson & Johnson, which owns Janssen--have been exiting dermatology to focus on other specialties, Reuters notes.
Who will Valeant have to surpass? GlaxoSmithKline has a dermatology unit, Stiefel Laboratories. And there's Allergan, the U.S. company best known for its Botox injection. It also sells the acne and psoriasis treatment Tazorac and a variety of skincare products. And then there's Medicis Pharmaceuticals, which produces the acne cream Ziana and acne tablet Solodyn, along with a variety of aesthetic products.
With the Janssen buy, Valeant gets products such as Retin-A Micro, used to treat acne; Ertaczo, an athlete's foot remedy; and Renova, a wrinkle-fighting cream. "They're out there buying assets for cash flow and building a broad dermatology presence," Stifel Nicolaus analyst Annabel Samimy told Reuters. "It seems like a pretty sound strategy to me. The assets that they're buying are not necessarily the ones that require a significant amount of promotion or expense behind them."
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