valeant pharmaceuticals international, inc. form 8-k

VALEANT PHARMACEUTICALSINTERNATIONAL, INC.FORM 8-K(Current report filing)Filed 09/07/10 for the Period Ending 09/07/10Telephone 514-744-6792CIK 0000885590Symbol VRXSIC Code 2834 - Pharmaceutical PreparationsIndustry Biotechnology & DrugsSector HealthcareFiscal Year 12/31http://www.edgar-online.com© Copyright 2012, EDGAR Online, Inc. All Rights Reserved.Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 8-KCURRENT REPORTPursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934-Date of Report (Date of earliest event reported): September 7, 2010BIOVAIL CORPORATION(Exact name of registrant as specified in its charter)Canada 001-14956 Not Applicable(State or other jurisdiction (Commission File Number) (IRS Employerof incorporation)Identification Number)7150 Mississauga RoadMississauga, OntarioCanada(Address of principal executive offices)L5N 8M5(Zip Code)Registrant’s telephone number, including area code: (905) 286-3000(Former name or former address, if changed since last report.)Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any ofthe following provisions: Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 7.01REGULATION FD DISCLOSURE.On September 7, 2010, J. Michael Pearson, Chairman and Chief Executive Officer of Valeant Pharmaceuticals International (“Valeant”), sentan email communication to employees of Valeant and Biovail Corporation (“Biovail”). A copy of the email communication is attached asExhibit 99.1.The information contained in this Current Report on Form 8-K under Item 7.01 and Exhibit 99.1 has been “furnished” and shall not be deemed“filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section. Theinformation in this Current Report under Item 7.01 and Exhibit 99.1 shall not be incorporated by reference into any registration statement orother document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing ordocument. By filing this Current Report on Form 8-K and furnishing this information, Biovail makes no admission as to the materiality of anyinformation in this report that is required to be disclosed solely by reason of Regulation FD.ITEM 9.01FINANCIAL STATEMENTS AND EXHIBITS.(d) Exhibits:Exhibit No.Description99.1 Email Communication sent to employees of Valeant and Biovail dated September 7, 2010, and furnishedpursuant to Item 7.01, “Regulation FD Disclosure.”Caution Regarding Forward-Looking Information and “Safe Harbor” StatementTo the extent any statements made in this document contain information that is not historical, these statements are forward-looking statementswithin the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, asamended, and may be forward-looking information as defined under applicable Canadian securities legislation (collectively, “forward-lookingstatements”).These forward-looking statements relate to, among other things, the expected benefits of the proposed merger such as efficiencies, cost savings,tax benefits, enhanced revenues and cash flow, growth potential, market profile and financial strength; the competitive ability and position ofthe combined company; the expected timing of the completion of the transaction; and the expected payment of a one-time cashdividend. Forward-looking statements can generally be identified by the use of words such as “believe”, “anticipate”, “expect”, “estimate”,“intend”, “continue”, “plan”, “project”, “will”, “may”, “should”, “could”, “would”, “target”, “potential” and other similar expressions. Inaddition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-lookingstatements. Although certain of these statements set out herein are indicated above, all of the statements in this filing that contain forwardlookingstatements are qualified by these cautionary statements. Although Valeant and Biovail believe that the expectations reflected in suchforward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on suchstatements. Certain material factors or assumptions are applied in making forward-looking statements, including, but not limited to, factors andassumptions regarding the items outlined above. Actual results may differ materially from those expressed or implied in suchstatements. Important factors that could cause actual results to differ materially from these expectations include, among other things, thefollowing: the failure to receive, on a timely basis or otherwise, the required approvals by Valeant and Biovail shareholders and government orregulatory agencies (including the terms of such approvals); the risk that a condition to closing of the merger may not be satisfied; thepossibility that the anticipated benefits and synergies from the proposed merger cannot be fully realized or may take longer to realize thanexpected; the possibility that costs or difficulties related to the integration of Valeant and Biovail operations will be greater than expected; theability of the combined company to retain and hire key personnel and maintain relationships with customers, suppliers or other businesspartners; the impact of legislative, regulatory, competitive and technological changes; the risk that the credit ratings of the combined companymay be different from what the companies expect; and other risk factors relating to the pharmaceutical industry, as detailed from time to time ineach of Valeant’s and Biovail’s reports filed with the Securities and Exchange Commission (“SEC”) and, in Biovail’s case, the CanadianSecurities Administrators (“CSA”). There can be no assurance that the proposed merger will in fact be consummated.

Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may befound in the body of this filing, as well as under Item 1.A. in each of Valeant’s and Biovail’s Annual Report on Form 10-K for the fiscal yearended December 31, 2009, and Item 1.A in each of Valeant’s and Biovail’s most recent Quarterly Report on Form 10-Q for the quarterlyperiod ended June 30, 2010. Valeant and Biovail caution that the foregoing list of important factors that may affect future results is notexhaustive. When relying on forward-looking statements to make decisions with respect to Valeant and Biovail, investors and others shouldcarefully consider the foregoing factors and other uncertainties and potential events. Neither Biovail nor Valeant undertakes any obligation toupdate or revise any forward-looking statement, except as may be required by law.Additional InformationIn connection with the proposed merger, Biovail has filed with the SEC a Registration Statement on Form S-4 that includes a definitive jointproxy statement of Valeant and Biovail that also constitutes a prospectus of Biovail, and each of Valeant and Biovail may file with the SECother documents regarding the proposed merger. The definitive joint proxy statement/prospectus was first mailed to shareholders of Valeantand Biovail on or about August 20, 2010. INVESTORS ARE URGED TO READ THE DEFINITIVE JOINT PROXYSTATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE PROPOSEDMERGER CAREFULLY IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSEDTRANSACTION. Investors may obtain the joint proxy statement/prospectus, as well as other filings containing information about Valeant andBiovail, free of charge, at the website maintained by the SEC at www.sec.gov and, in Biovail’s case, on SEDAR at www.sedar.com. Investorsmay also obtain these documents, free of charge, from Valeant’s website (www.valeant.com) under the tab “Investor Relations” and then underthe heading “SEC Filings,” or by directing a request to Valeant, One Enterprise, Aliso Viejo, California, 92656, Attention: CorporateSecretary. Investors may also obtain these documents, free of charge, from Biovail’s website (www.biovail.com) under the tab “InvestorRelations” and then under the heading “Regulatory Filings” and then under the item “Current SEC Filings,” or by directing a request toBiovail, 7150 Mississauga Road, Mississauga, Ontario, Canada, L5N 8M5, Attention: Corporate Secretary.

The respective directors and executive officers of Valeant and Biovail and other persons may be deemed to be participants in the solicitation ofproxies in respect of the proposed transaction. Information regarding Valeant’s directors and executive officers is available in its AnnualReport on Form 10-K for the fiscal year ended December 31, 2009, which was filed with the SEC on February 24, 2010, and in its definitiveproxy statement filed with the SEC by Valeant on March 25, 2010. Information regarding Biovail’s directors and executive officers isavailable in its Annual Report on Form 10-K for the fiscal year ended December 31, 2009, which was filed with the SEC on February 26, 2010,and in its definitive proxy statement filed with the SEC and CSA by Biovail on April 21, 2010. Other information regarding the participants inthe proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the definitivejoint proxy statement/prospectus and other relevant materials filed with the SEC. These documents can be obtained free of charge from thesources indicated above. This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of anoffer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawfulprior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means ofa prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

SIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned hereunto duly authorized.BIOVAIL CORPORATION,by:/s/ Jennifer TindaleName: Jennifer TindaleTitle: Vice President, Associate GeneralCounseland Corporate SecretaryDate: September 7, 2010

EXHIBIT INDEXExhibit No.Description99.1 Email Communication sent to employees of Valeant and Biovail dated September 7, 2010, and furnishedpursuant to Item 7.01, “Regulation FD Disclosure.”

Exhibit 99.1Dear Colleagues:As the summer winds down and the official beginning of our new company approaches, I write to update everyone on the progress we havemade on integration plans.First I thank all of you who have and continue to work tirelessly and professionally to bring our two companies together –on integrationplanning, raising the financing, meeting the legal requirements, and on the many, many other tasks that have been added to your normalworkload.Second, I thank all of you who have continued to focus on running our two businesses. As I continue to monitor weekly sales and other keymetrics for the Valeant businesses, I see continued strong performance. Peggy and Gilbert have indicated to me that they are seeing similarstrong performance at Biovail. And hats off to Sue Hall and the Potiga (retigabine/ezogobine) team for shepherding this potentially veryimportant medicine through the regulatory process. Unlike most other integrations I have observed, I am pleased to report that the new Valeantis not losing momentum. And on behalf of both of our Boards and shareholders, I salute all of you for these accomplishments.In terms of integration planning, we are largely finished. The new strategy is agreed, the organizational design is largely done, and the synergytargets, both in terms of dollars and timing, have been significantly exceeded. Over $300 million of cost synergies have been identified and weexpect to realize well north of $200 million in 2011. The rest will be captured in 2012. As suggested in my earlier communication, we areplanning to reduce headcount by approximately 25% across the U.S. and Canadian business of the combined company. In addition, ourcombined cash tax rate by the end of 2012 is expected to be approximately 15%.The primary purpose of this memo is to communicate the new strategy, discuss our organizational model, and outline decisions that have beenreached. This includes the timing of specific communications of individual roles in the new company and programs we have put in place forcolleagues who will not be continuing with us on the next phase of our journey. It is a bittersweet moment in the history of both ourcompanies, but I am confident that all of you will take pride in the way the new Valeant will be treating all of our employees during thistransition period.So let me first touch on: (1) New Valeant strategy and operating philosophy, (2) organizational design and philosophy and finally (3) decisionsmade and timing.1. New Valeant Strategy and Operating PhilosophyOur vision for new Valeant is to become the leading specialty pharmaceutical company in the world . We will measure our successthrough our returns to our shareholders and our overall market capitalization. We will have a balanced and diversified portfolio of businesses:in terms of types of products – branded pharmaceuticals, over the counter medications, branded generics, and unbranded generics; therapeuticareas - dermatology, neurology, and ophthalmology; and geographies - U.S., Canada, Central Europe, Latin America, Australia and NewZealand. We will measure ourselves in terms of overall growth, organic growth, cash earnings, and cash flow from operations. Our portfoliowill evolve over time. All of our assets are for sale if they are worth more to others than they are to our shareholders. However, if ouroperating units continue to meet their financial objectives, our bias will be to keep them. Over time, I would expect us to both enter and exitgeographies, therapeutic areas, and potentially even product forms. We will continue to seek out high growth, high profit markets where wecan bring a unique competitive advantage, and exit markets where growth and profitability is no longer attractive. Again, we will measure oursuccess through shareholder returns and market capitalization, not revenues, assets, or other measures.

In terms of innovation, we will continue to invest in a leveraged R&D portfolio (leveraged means we will seek partners for any of our highspend development efforts), but our spend in R&D will be substantially less than our peers. Internal R&D has not proven to be a good returnfor most pharmaceutical companies over the last decade, and I don’t think we are smarter, better or luckier than others in the industry. To theextent that we have a unique capability such as our Dow formulation expertise, we will continue in-house development. Our primary source ofinnovation will come through acquisitions of smaller in-line products that we can grow dramatically though our infrastructure and commercialprocesses as well as smart and focused life cycle management projects. Past examples of acquiring innovation include: CeraVe, Atralin,Wellbutrin XL, Lacrisert and Acanya, in the U.S., Dr. Renaud and Vital Science in Canada, DermaTech and Dr. Lewinns in Australia, EMO-FARM in Central Europe, Delta and Bunker in Brazil, and Tecnofarma in Mexico.Given our new corporate structure and Barbados subsidiary, our returns on these types of investments will only be enhanced.We will operate a low cost operating model in all we do . In essence, we will continue to apply a low margin operating mindset to a highmargin business. We will take pride in our frugality, our ability to make quick decisions based on internal resources, our willingness to allwear different hats at different times. And in return, we will pay above average compensation for superior performance and beyond averageshareholder returns.I recognize that many of you did not sign up for either this strategy or operating philosophy. And many of you may choose not to continue towork for the new Valeant. I understand and respect that decision. For those of you who do continue with the new Valeant, I suspect that mostof you will grow more as a professional over the next few years than you have at any previous time in your careers.2. Organizational Design and PhilosophyTo support our strategy, the new Valeant will employ a decentralized organizational model . We will create ten operating units – U.S.Dermatology - Rx, U.S. Dermatology – OTC, U.S. Neurology / Other, U.S. Ophthalmology, Barbados, Canada, Mexico, Brazil, Europe, andAustralia/New Zealand. Each will be led by a President / General Manager and he/she will in most cases have direct line responsibility for allcritical functions: sales, marketing, business development, manufacturing, R&D, human resources, IT, legal, etc. Only finance, compliance,regulatory and pharmacovigilence will report centrally to ensure proper controls on the business. However, the CFO’s of each of these unitswill also be expected to be business partners of the operating units. Each of these operating units will be managed and held accountable for fourkey metrics:page 2 of 5

1. Constant currency growth2. Organic growth3. EBIT4. Cash flow from operationsOur corporate targets for each, and what I expect from each of our units, are:1. Constant currency growth >20%2. Organic growth >10%3. EBIT margin >35%4. Cash flow from operations – Annual targetWhile not all units will exceed each metric every year, we expect the portfolio of businesses to deliver in aggregate.Each of our Presidents / General Managers will also be expected to create a highly ethical environment for their employees. In the end, ourprimary mission as an organization is to serve the patients and consumers who use our products, the physicians who prescribe / recommendthem and the customers who provide retail outlets for these products. Healthcare companies are held by society to the highest possible ethicalstandard – and they should be. Adhering to this extremely high ethical bar supersedes any financial or other objective.To succeed, each of our units will need to do two things well: (1) Execute flawlessly in terms of developing, producing, marketing and sellingtheir products and (2) Identify, negotiate and close value creating business development deals (working as appropriate with our new Barbadossubsidiary) on behalf of the company. Again, our focus in our business development activities will be on in-line, or soon to be marketedproducts.Consistent with the decentralized operating philosophy, our corporate center will be small, lean and focused on three things:1. Ensuring adequate controls to protect our shareholders and to ensure we are in compliance with all regulatory requirements2. Ensuring overall corporate financial objectives are met3. Actively managing all capital allocation decisions (e.g.: what business development deals we will or will not do)In total, our corporate staff functions will number less than 80 people.3. Decisions Made and TimingOver the past several months, we have been working diligently to design and staff the new Valeant organization and to identify and begin toeliminate unnecessary non-FTE costs consistent with our new strategy and organizational approach.page 3 of 5

3.1 New Executive Management TeamThe new Executive Management Team or EMT will initially consist of:Rajiv De Silva – President of Valeant and COO of Specialty Pharmaceuticals, Peggy Mulligan – Chief Financial Officer, and Mark DurhamSVP of HR. In addition, I will be naming a new General Legal Counsel in the next couple of weeks who, along with me, will complete the fiveperson EMT. Peter Blott, Bhaskar Chaudhuri, Gilbert Godin, Greg Gubitz, Elisa Karlson, and Steve Min will not continue with the combinedcompany.Rajiv will have responsibility for all Specialty Pharmaceutical Operations, including: Canada, Australia, Aton, Dow Services, U.S. Neuro,Coria, Kinerase and Specialty R&D (Dow, Neuro and Aton) and North America manufacturing including Steinbach.Tom Schlader will assume responsibilities for new Valeant Canadian Operations including Biovail’s commercial operations in Canada. Hewill also be responsible for our Canadian Manufacturing function with the exception of Steinbach. Our Canadian commercial operations willbe headquartered in Montreal.Rob Tessarolo, current head of Biovail’s Canadian business is considering other opportunities within the new Valeant. I thank Rob for hissuccessful leadership of Biovail’s Canadian operation over the past 3 years.Our branded generics businesses in Europe and Latin America will report directly to me.Peggy Mulligan, who was previously announced, will have responsibilities for Finance, IT, Procurement and Facilities.Our new General Counsel will assume responsibilities for all of the corporate legal teams.Mark Durham will be responsible for corporate Human Resources including talent management, benefits, compensation and internalcommunication.Barbados will continue to report to Bill Wells until I establish my residency in Barbados, at which time it will transfer to me.3.2 New OrganizationAs part of the integration process, we have developed new organization charts for U.S. Operations, our Canadian business and all corporatefunctions. Over the next few weeks the new Executive Management Team will be working with me to populate these organization charts withemployees from Biovail, Valeant, and when appropriate from outside the company. We expect to notify all employees of Biovail and Valeantof their individual employee status by October 15 th .I would like to thank all of our departing executives for their leadership and dedication and wish them well in the next phase of theirprofessional lives. To the new executive team, I again offer my congratulations and best wishes.page 4 of 5

3.3 Pipeline DecisionsOver the past couple of months, we have conducted an extensive R&D pipeline review across both companies. We have a number ofrecommendations that once finalized by the appropriate Boards, will be communicated to our partners. In the coming weeks, I willcommunicate these decisions both internally and to the investor community. For projects we plan to stop funding, we will look to maximizethe value of these assets through partnerships and/or outright sales.3.4 Severance PlansBoth the Canadian and U.S. Severance Plans have been finalized. The objective of these severance plans is to provide individuals with supportduring transition to alternative employment. This support consists of financial payments, benefits extension and career transition services. Ourintention is to treat all departing employees with the support and respect they deserve.Information about these plans will be forwarded to Canadian and U.S. employees via email over the next few days. Our intent is to inform allemployees of their job status on or before October 15 th .3.5 Site Town HallsDuring the week of September 6 th , we will be hosting town halls at all Biovail and Valeant locations in North America (with the exception ofSteinbach where I held a town hall last week). We will provide an overview of the information shared today and use this time to address yourquestions and concerns.Details regarding the specific times and locations of town halls will be sent shortly to each site under a separate email.***I appreciate that, as exciting as this new venture may be, change is difficult and some of this information may be unsettling – particularly withregard to appointments and terminations. It is not easy when friends and colleagues leave the business or when there is uncertainty regardingyour individual roles. My objective with this announcement is to share with you, openly and honestly, what has transpired over the past coupleof months and plans for the weeks ahead. I hope that this message has provided some clarity and guidance for each of you.If you have questions please attend your site town hall. You can also speak with your local HR representative. Thank you for your continuedsupport throughout this process.Best regards,Mikepage 5 of 5