Valeant Pharmaceuticals to divest Sprout Pharmaceuticals in strategic move

Valeant Pharmaceuticals International has announced a significant transaction involving the sale of Sprout Pharmaceuticals back to its original owners. This strategic divestiture includes a deal where Valeant will receive a 6% royalty on global sales of Sprout’s female libido drug, Addyi (flibanserin), for 18 months following the closure of the sale.

Background of the Acquisition and Sale

The initial acquisition of Sprout by Valeant took place in August 2015, shortly after Sprout’s drug, flibanserin, marketed as Addyi, received approval from the U.S. Food and Drug Administration (FDA). Addyi is approved to treat acquired, generalized hypoactive sexual desire disorder (HSDD) in premenopausal women, marking a significant foray into the sexual health sector for Valeant at the time.

Strategic Focus and Portfolio Streamlining

Joseph Papa, Chairman and CEO of Valeant Pharmaceuticals, commented on the divestiture: “Returning Sprout to its former owners will enable us to further streamline our portfolio and reduce complexity in our business. As we transform Valeant, we are focusing our resources on our core businesses to best serve our shareholders, customers, and patients. These areas include eye health, gastroenterology, and dermatology.”

Details of the Agreement and Future Plans

Under the terms of the agreement, Valeant not only secures ongoing royalties from the sales of Addyi but also alleviates itself from any obligations linked to the original acquisition agreement, including profit-sharing with former Sprout shareholders. This move is part of Valeant’s broader strategy to concentrate on its primary sectors and reduce operational complexities.

Potential Impacts and Legal Considerations

The deal also stipulates the discontinuation of ongoing litigation filed by the former Sprout shareholders, to be scrapped with prejudice, simplifying legal entanglements and focusing on forward-moving strategies. Sprout Pharmaceuticals, now returning to its original ownership, continues to market Addyi as its sole product.

Closing Conditions and Outlook

The transaction is expected to close by the end of this year, pending certain closing conditions. This strategic divestiture not only reshapes Valeant’s business focus but also impacts the market dynamics around female sexual health drugs, as Sprout reclaims its original position and continues its journey independently.