Bill Ackman × Valeant Pharmaceuticals — The Activist's $4B+ Loss

The mid-2010s were the heyday of the so-called 'platform pharma' or 'roll-up pharma' model. Companies such as Valeant, Endo, Mallinckrodt and Concordia minimised internal R&D, used leverage to acquire proven minor drug assets, cut costs and raised prices to manufacture EBITDA growth. By domiciling in Canada or Ireland (tax inversion), they pushed effective tax rates into the single digits and sourced most of their EPS growth from inorganic deals. Wall Street initially celebrated this as 'capital-efficient pharma,' and Valeant sat at the apex. The model carried two structural fragilities, however. First, once the acquisition pipeline stopped, EPS growth stopped. Second, revenue driven by price increases is acutely vulnerable to political and reputational risk.

The specialty pharmacy model emerged to combine patient access with workarounds to insurer pre-authorisation, but it also created a grey zone in revenue recognition and related-party disclosure. After Philidor, major PBMs tightened their compliance reviews and the FTC, SEC and DOJ expanded their investigative scope on specialty pharmacy relationships.

Valeant, headquartered in Laval, Quebec, was a multinational specialty pharma that grew revenue and EBITDA explosively under Mike Pearson, who took over in 2008 and led more than 60 acquisitions. The flagship deals were Bausch & Lomb (ophthalmology, 2013, $8.7B) and Salix Pharmaceuticals (GI, 2015, $11B). Pearson's operating doctrine was simple: R&D was 'a tax on failure,' and capital was better deployed buying proven drug assets, cutting costs and raising prices. By 2015 roughly 80% of revenue was acquisition-sourced and organic growth was low single digits or negative. That fact, surfaced in disclosures only after Philidor, decisively broke market confidence in the model.

There is no conventional deal structure in this case. It is not a merger or an acquisition. It is an activist position built with hedge-fund capital through open-market accumulation, a Schedule 13D filing, a conviction trade, eventual board service and a final disposition at a loss. Decomposing it by timing, size, board seat and exit trigger gives a clear template for how an activist trade can unravel.

Pershing Square ran the position largely on its own research, with limited outside financial advisory. Valeant, on the other side, relied on Davis Polk and Sullivan & Cromwell as principal crisis-management, internal-investigation and litigation-defence counsel during the Philidor period, while a separate external firm advised the board's Ad Hoc Committee. Citron Research operated as a classic short-seller research shop, publishing independently without retained external advisors.

Note: Advisor information is based on public sources; some advisory roles may not be formally confirmed. Crisis-management counsel rotated through several phases of the Philidor matter.

Unit: $M (millions) | ~80% of revenue acquisition-driven, organic growth low single digits or negative | Source: Valeant 10-K filings, adjusted for 2016 restatement context

The 'valuation' here is not an acquisition price but Pershing Square's trade P&L. The fund built its 5.7% stake (~19.5 million shares) at an average of approximately $196, peaked at an unrealised gain of about $1.2B at $257 in August 2015, and then watched roughly 18 months of compounding bad news — the Clinton tweet, Citron's report, the Philidor disclosure, the CEO change, the board seat — drive the share price below $11 by the time of the March 2017 exit. Valeant's enterprise multiple compressed in parallel, from roughly 12x EV/EBITDA at the peak to roughly 7-8x by the time of the disposal, reflecting both a lower EBITDA and a structurally heavier debt burden.

Note: Precise average entry and final loss vary slightly across Pershing Square's own letters and press reports, with disclosed losses ranging from ~$2.8B to ~$4.0B+. This table reflects publicly filed 13Ds, Pershing Square investor letters and FT/WSJ coverage.

Nine years after Pershing Square's full exit in March 2017, Valeant has been renamed Bausch Health Companies (2018), and its ophthalmology subsidiary Bausch + Lomb was separately listed on the NYSE in 2022. As of May 2026, parent Bausch Health trades around $5 per share, with a market capitalisation of roughly $2 billion, more than 97% below the 2015 peak market cap of approximately $90 billion. Debt has been reduced from about $30B to the low $20Bs through asset sales and refinancing, but the leverage relative to EBITDA remains a structural drag on equity recovery. Bill Ackman, meanwhile, rebuilt the Pershing Square book around Restaurant Brands International, Hilton, Howard Hughes, Chipotle, Universal Music Group, Lowe's and Google, posting record performance in 2019-2021. Pershing Square Holdings (PSH) has seen its closed-end discount narrow from the -25 to -30% range of the 2015-2018 period to roughly -15% by 2024-2026.