Investor Warren Buffett said Berkshire Hathaway has called the business model of Valeant Pharmaceuticals flawed and panned the company's leadership.
Speaking Monday morning live on CNBC in Omaha, Neb., Buffett said: "I don't think you'd want your son to grow up and run a company in the manner that Valeant was run," he said.
Laval, Que.-based Valeant has been under a microscope recently over the company's practice of rapidly boosting prices for some of its drug products.
J. Michael Pearson, who presided over the company's strategy of buying up smaller companies and boosting prices on some drugs, was due to be replaced early this month as CEO of Valeant by Joe Papa.
Buffett said at least two large investors in Valeant urged Berkshire to buy into the company "and part of the pitch was essentially what they could do with the pricing of products they bought from other places."
On April 30, at Berkshire Hathaway's annual general meeting in Omaha, Buffett said Valeant's business model was "enormously flawed," according to Bloomberg.
Ackman boosts role
Last week, Pearson and billionaire hedge fund manager William Ackman, whose fund holds a large stake in Valeant and controls two seats on its board, testified before the U.S. Senate's committee on aging, which has been looking at rapid drug price hikes.
Pearson said he and Valeant were too aggressive in their strategy of jacking up prices.
"I regret pursuing transactions where a central premise was a planned increase in the prices of the medicines," he said.
During his testimony, Ackman said Valeant's strategy can do "more for innovation in pharma by acquiring other drug companies" than by developing its own drugs.
He also said some of the sharp price hikes — including those that first attracted congressional scrutiny — were mistakes that have caused "great reputational damage."
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