Joe Papa could be just a few weeks away from realizing the fruits of a half-decade of labour.
In a Tuesday morning interview, the Bausch Health Companies Inc. CEO said the Montreal-based pharmaceutical giant “in the next 30 days, we will have the ability to go forward” with plans to split the company into three separate businesses. Noting he had been “working on this now for going back five years” to when he first took the reins of what was then known as Valeant Pharmaceuticals in 2016, Papa said “today, we stand at the threshold of being able to launch and separate into three companies.”
Having completed all the technical requirements as of Oct 1., Papa confirmed the plan is to begin by spinning off Solta Medical as an independent medical aesthetics business via an initial public offering on New York’s NASDAQ exchange.
Roughly one month later, the company’s eye health division will begin trading on the Toronto Stock Exchange under the Bausch + Lomb name, leaving the core pharmaceutical business to trade on the TSX as Bausch Pharma.
Despite having all the pieces in place as soon as next month, Papa said current market volatility could result in some delay.
“We are ready to go and we obviously want to do it with the appropriate market conditions, so we are going to keep ourselves ready and on the shelf so that we can pull ourselves off the shelf and go forward with it when those market conditions are ready,” Papa said. “It has been a little turbulent in the marketplace, but for us internally, what we are going to do is make sure we are prepared so that when conditions are appropriate we can go forward.”
Before focusing on the spinoff plans, Papa said he first “had to solve some of the legacy legal issues and some of the debt issues” when he took the reins of the company in 2016 after previously running British drugmaker Perrigo. By “legacy legal issues”, Papa was referring to the more than US$1 billion in payouts the company has made since 2017 to settle over 160 legal claims related to the Allergan, Inc. scandal that caused a historic collapse in the company’s share price.
The company has paid off more than one third of the US$30 billion debt load it was carrying when Papa took over. Part of the strategy behind the spinoff plan, Papa said, was to further reduce the amount of money still owed to creditors.
“As we do an IPO of the Solta business, as we do an IPO of the B&L business - and also B&L will raise some debt, as we take those proceeds they will be used to pay down the overall debt of Bausch Health, the remaining company,” he said.
Bausch Health first announced plans to spin off its eye health business in August 2020, followed almost exactly one year later with a release disclosing its Solta Medical IPO plans. Papa said the eye health business is particularly well-positioned for growth.
“Statistics say by the year 2050, about 50 per cent of the population will have myopia so clearly, vision correction will be needed. But the important consequences of myopia, with high myopia, it also increases the potential for other risk factors like retinal detachment, glaucoma or macular degeneration,” he said.
“That is why we think the eye health business is going to be a very strong competitor out there. We will have, we believe, the most integrated eye health business with a prescription business, the surgical business, the consumer business and of course we will have contact lenses, that puts us in a great spot.”
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