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Valeant Pharmaceuticals sells Obagi skincare company in latest effort to cut debt

Valeant plans to use the proceeds from the sale of the business to reduce debt
skin
Valeant has been accused of hiking prices of drugs with little or no competition

Valeant Pharmaceuticals International Inc (NYSE:VRX) has agreed to sell its skincare business, Obagi Medical Products, to a Hong Kong-based firm for US$190mln in cash.

Obagi, a drug company that specialises in products for skin aging, skin damage and other skin probems, will be sold to Zhonghua Finance Acquisition Fund I LP.

Proceeds from the sale will be used to cut Valeant’s debt as the company works to turn around the business following a troubled year. The deal is expected to be completed in the second half.

Valeant sees Obagi generating a net profit of US$85mln and adjusted underlying earnings (EBITDA) of US$30mln.

Shares in Valeant shares 1.22% to US$17.44 in US pre-market trading.

Valeant has been trying to sell off its non-core assets to reduce its debt pile of about US$29bn as of 31 March in the wake of scandals over alleged fraud and price gouging. Last week the company said it paid down US$811mln of debt after selling its cancer treatment unit Dendreon Pharmaceuticals to China's Sanpower.

The drugmaker has received backlash for raising prices of old drugs with little or no competition but chief executive Joseph Papa has insisted that average price increase was lower than the consumer price index in 2016.

Last year former executives of Valeant and mail-order pharmacy Philidor were charged with running a fraud-and-kickback scheme that swindled Valeant out of millions.

 

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