Valeant Pharmaceuticals' Investor Day 2012 Download

Valeant
Pharmaceuticals
International, Inc.
Investor Day
June 21, 2012

Valeant’s Investor Day Agenda
 Today’s Schedule
 Opening Remarks - Mike Pearson
 Financial Discussion – Howard Schiller
 Business Overview – Rajiv De Silva
 Emerging Markets
 Europe – Pavel Mirovsky
 South East Asia/South Africa – Andrew Howden
 Specialty Pharmaceuticals
 U.S. Dermatology – Dave Mullarkey
 Global R&D – Susan Hall
 Wrap up/Lunch
1 1

Introductions
 Panel Participants
 John Connolly – GM Russia/CIS/Adriatic Region
 Julie Kang – GM Podiatry
 Alissa Hsu Lynch – GM U.S. Consumer Products
 Carlos Picosse – GM Brazil
 Javier Rovalo – Chairman – Latin America
 Tom Schlader – President, Canada
 Dan Spira – GM Australia
 Janet Vergis – CEO, OraPharma
 Ryan Weldon – GM U.S. Neurology and
Other/Aesthetics

2 2

Introductions
 Guests In Attendance
 Ronald Farmer – Board Member
 Robert Power – Board Member
 Norma Provencio – Board Member
 Katharine Stevenson – Board Member
 Robert Chai-Onn – General Counsel
 Brian Stolz – Chief Human Capital Officer
 Tanya Carro – Corporate Controller
 Grace Lin – Treasurer

3 3

Important Information
Forward-looking Statements
This presentation may contain forward-looking statements, including, but not limited to, statements regarding our financial guidance
(including quarterly trends) with respect to revenues, non-GAAP cash earnings per share and adjusted cash flow from operations, future
growth, potential product launches, regulatory submissions and approvals, timing and costs of integration, synergies, expenses, business
development opportunities and market position, and the impact of foreign exchange on our financial performance and projections with
respect to market growth, size and spend. Forward-looking statements may be identified by the use of the words "anticipates," "expects,"
"intends," "plans," "should," "could," "would," "may," "will," "believes," "estimates," "potential," or "continue" and variations or similar
expressions. These statements are based upon the current expectations and beliefs of management and are subject to certain risks and
uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and
uncertainties include, but are not limited to, risks and uncertainties discussed in the company's most recent annual or quarterly report filed
with the Securities and Exchange Commission (the “SEC”) and other risks and uncertainties detailed from time to time in the Company’s
filings with the SEC and the Canadian Securities Administrators (“CSA”), which factors are incorporated herein by reference. Readers are
cautioned not to place undue reliance on any of these forward-looking statements. Valeant undertakes no obligation to update any of these
forward-looking statements to reflect events or circumstances after the date of this presentation or to reflect actual outcomes.

Non-GAAP Information
To supplement the financial measures prepared in accordance with generally accepted accounting principles (GAAP), the Company uses
non-GAAP financial measures that exclude certain items. Management uses non-GAAP financial measures internally for strategic decision
making, forecasting future results and evaluating current performance. By disclosing non-GAAP financial measures, management intends to
provide investors with a meaningful, consistent comparison of the Company's core operating results and trends for the periods presented.
Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other
companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in
accordance with GAAP. The Company has provided guidance with respect to cash earnings per share, adjusted cash flows from operations
and organic growth rates, which are non-GAAP financial measures. The Company has not provided a reconciliation of these forward-looking
non-GAAP financial measures due to the difficulty in forecasting and quantifying the amount of the items excluded from the non-GAAP
financial measures that will be included in the comparable GAAP financial measures. Reconciliations for other non-GAAP financial
measures can be found in the appendix to this presentation and in the Company’s earnings releases, which are available under the Investor
Relations section of the Company’s website (www.valeant.com).

Note on Financial Guidance
The reaffirmation of the Company’s previous financial guidance issued on May 3, 2012 is effective only as of the date hereof, June 21, 2012,
and will not be updated or confirmed until the Company publicly announces updated or affirmed guidance.

4

Opening Remarks

J. Michael Pearson
Chairman and Chief Executive Officer

Investor Day
June 21, 2012

Agenda
 Overview

 Our Strategic Principles

 How they have changed over the past 4 years

 Our people and our compensation

 Update on our OraPharma acquisition

 Objectives for today
6 6

Valeant Pharmaceuticals Overview
 Focused, multinational specialty pharma company
 $2.4B in 2011 revenue and ~7,000 employees
 Headquartered in Montreal, Canada (NYSE/TSX: VRX)
 International footprint
 Specialty Pharma (U.S., Canada, Australia, New Zealand)
 Branded Generics – Central and Eastern Europe; Latin America; South
East Asia and South Africa
 Diversified revenue base
 Over 500 products
 Limited generic risk
 Minimal exposure to US healthcare reform
 Leveraged R&D Model with promising pipeline
 Ezogabine/retigabine
 Dermatology – IDP-108, lifecycle management
 Branded generics/ various OTC line extensions
 Experienced, high quality management team, with established
track record for delivering results
7 7

Establishing a Track Record of Performance
($ in millions)

Revenue Free Cash Flow
$995
$866
$728

$1,532 $1,651 $520
$1,414
$2,755 $377 $366
$843 $820 $2,463
$757 $1,928 $353
$182
$306
$690 $657 $830
$184 $167
$71
FY 2007A FY 2008A FY 2009A FY 2010A FY 2011A LTM 31- FY 2007A FY 2008A FY 2009A FY 2010A FY 2011A LTM 31-
Mar- Mar-
2012
2012

Cash EPS

$2.98
$2.63

$1.80

2010A 2011A 2012LTM 31-
Mar-2012

Valeant Biovail

•2010 and prior years are pro-forma
8 8
•Free Cash Flow = EBITDA less (Cash Taxes, Cash Interest, & CapEx), plus/minus changes in Working Capital

Revenue Mix
Total Revenues 2010 Total Revenues 2012 Fcst

21%
32%

3% US US
Canada Canada
50%
Australia Australia
11%
65% Emerging Markets Emerging Markets
7%

11%

Product Revenues 2010 Product Revenues 2012 Fcst
9% 14%

20%

Rx Rx
Branded Generics Branded Generics
27%
OTC 59% OTC

71%

9 9

Our Strategic Principles
1. Only compete in attractive market segments • Geographies
• Payors
• Competition
• Therapeutic areas
• Product forms
2. Highly disciplined business development driven • Undermanaged company assets
growth strategy • In line vs. pipeline
• Cash on cash returns >20%
• Don’t bet on science
3. Decentralized operations and strategy • Attract top talent
• “Insider” in all markets
• No global S&M infrastructure
4. Low cost operating structure • Generic mindset

5. Diversification • Geographies (>50% outside the U.S.)
• Products (No single product more than 7%
sales)
6. Strong bias towards enduring assets • Branded generics
• OTC
• Topicals
• Life cycle management

10 10

How our Strategy has Changed
(Lessons learned)

 Avoid primary care tail products in the U.S.
(Wellbutrin)
 Greater discipline on integration costs
 Bias to private company deals
 Bias towards business development vs. share
repurchase
 Bias towards asset vs. company acquisitions
 Cash flow from operations most important metric

11 11

Our People and Our Compensation

 Growth strategy requires continual
development / upgrading of talent

 Culture / motivated workforce is critical to
excellent execution

 Compensation system geared to
rewarding long term shareholder value
12 12

Notable New Additions To Our Team in
Last 12 Months
 Howard Schiller (CFO) – Goldman
 Pavel Mirovsky (President Valeant Europe) – CEO Polpharma
 Andrew Howden (CEO iNova) – AstraZeneca
 Brian Stolz (Chief Human Capital Officer) – GhSmart
 Tage Ramakrishna (Chief Medical Officer) – Progenics
Pharmaceuticals
 Alissa Hsu-Lynch (GM Consumer Products) – J&J
 Janet Vergis (CEO OraPharma) – J&J

AIP Group Increased from
42 people (2010) to 68 People (2012)
13 13

2012 Survey Results - Focus on Our People
 People like working here – 92% agree or strongly agree that they
are satisfied with their jobs
 People believe in our continued growth – 95% agree or strongly
agree that Valeant is on the right track for continued growth
 90% of our employees would recommend Valeant as an
employer to a friend or colleague
 Our employees cite the following attributes to describe the
culture
 Ethical
 Accountable
 Performance oriented
 Customer focused
 Dynamic
 Entrepreneurial
14 14
Source: 2012 World-Wide Employee Survey conducted in May 2012.

Compensation for Senior Leadership
Annual Comp
 Target 50% of benchmark for base salary
 Target top quartile with bonus
 Revenue – 25% (zero if Cash EPS not met)
 Cash EPS – 75%

Equity Comp
 3 year front loaded equity
 >15% TRS to vest
 Up to 2-3 times multiple - based on 30-45% TRS

15 15

OraPharma, a Valeant Company
Market Characteristics Business Overview
 U.S. dental market (products) -  Founded in 1996
~$17B  Became subsidiary of J&J in 2002
 Acquired by Water Street
 ~$ 5B Periodontal Market
Healthcare Partners in 2010
 Fragmented with no big pharma  Most recognized name in Dental
presence Pharmaceuticals – OraPharma
 ~7%+ growth projected  100 person, highly respected
 45,000+ dental offices in the sales force
U.S.  Key products
 Broad potential for offerings  ARESTIN (periodontis) Planned new
 Best in class – 35 studies
 Rx products
 Xerese (cold sores)
 Devices  Best in class
 OTC  Healos (bone regeneration)
 High cash pay component  Status
 Deal closed June 18, 2012

16 16

Why OraPharma?
Strategic Criteria Financial Criteria
 Niche Market  Base Case
 Avoid big pharma  36% tax rate

 Cash pay / no government  With cost synergies
reimbursement  U.S. only

 Durable assets  IRR > 20%
 Upside Case
 Ability to expand into other
 Lower tax rate
geographic markets
 Promotion of Valeant products
 Attractive additional BD (e.g. Xerese)
opportunities to add to  Pipeline products
platform (drugs, devices, OTC)  Other geographies
 Double digit growth
opportunity

17 17

Today’s Meeting Objectives
1. Addressing Investors’ Financial Concerns
 Our progress on building a cash flow generating
machine
 Demystifying organic growth calculations
 Clarifying normal rhythm of our earnings and how
annual guidance should be anticipated on a quarterly
basis
 Providing insight into restructuring charges
 Outline changes we are making to our quarterly
earnings call based on your feedback

18 18

Today’s Meeting Objectives
(Continued)
2. Address Investor Questions Around Our
Emerging Markets Business
 Underlying performance in Europe
 Our strategy in South East Asia and South Africa
3. Address Questions Around Underlying U.S.
Dermatology Performance
4. Update On How We Are Spending
$100M/year in R&D

19 19

What I Am Excited About
 Overall performance of the business continues to be
strong – both operationally and financially
 In the last year, we have become a major player in
two of our key segments – Central and Eastern
Europe and dermatology
 We have added 8 new growth platforms (South East
Asia, South Africa, Russia / CIS, nutritionals in
Brazil, OTC in Canada, Podiatry, Oral health,
Aesthetics)
 Significantly strengthened our organization
 Efinaconazole (IDP-108); Potiga/Trobalt; Regederm
 Deal flow has never been better – both small & large
20 20

Financial Discussion

Howard Schiller
Executive Vice President, Chief Financial Officer

Investor Day
June 21, 2012

Topics to Cover
 Financial Performance
 Established track record of financial performance
 We have a growing, profitable business model

 Organic Growth
 Both the base business and acquired businesses are growing, although there will be
quarter - quarter fluctuations in growth rate
 March 31st, 2012 LTM base business organic growth is 8% - “Same Store Basis”

 Business Development
 A disciplined approach - high IRR’s and short payback periods
 Timing and amount of synergy capture and restructuring charges depends on the type of
deal
 BD effort to date has added significant revenue and new growth opportunities

 Guidance
 Excluding the impact of acquisitions, 40-45% of Cash EPS is generated in 1st half of year
 FX has been a headwind
 We are re-affirming high end of guidance from our Q1 earnings call

 Changes to our quarterly presentation
 We have taken your suggestions seriously
23

Growing, Profitable Business Model
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12
Reported Revenues ($M) $452 $494 $467 $515 $565 $609 $601 $688 $856
Sale Cloderm/5FU/IDP111 -$36 -$66
Milestones -$40
Revenues excl. certain one-time items $452 $494 $467 $515 $529 $569 $601 $688 $790
Revenue Growth (vs PYQ) 17% 15% 28% 34% 49%

Reported Cash EPS $0.44 $0.46 $0.40 $0.50 $0.62 $0.73 $0.66 $0.93 $1.14
Sale Cloderm/5FU/IDP111 (margin) -$0.05 -$0.15
Milestones -$0.12
Gain on Cephalon Shares -$0.06
Exchange Gains -$0.06 -$0.08
Cash EPS excl. certain one-time items $0.44 $0.46 $0.40 $0.50 $0.56 $0.54 $0.66 $0.87 $0.91
Cash EPS Growth (vs PYQ) 28% 17% 65% 75% 61%

Cash Earnings ($M) excl. certain one-
time items $146 $153 $131 $164 $188 $179 $212 $277 $287

Cash EPS / Revenue 32% 31% 28% 32% 36% 31% 35% 40% 36%
Cash EPS / Revenue (LTM) 31% 32% 32% 34% 36% 36%

•Used Q4, 2010 (1st Q post-merger) for Q1-Q3, 2010 share count
•Q3’10 and prior period revenue and cash earnings are pro-forma

24

What Is Management Focused On?
 Integration and operational excellence
 Organic Growth
 Synergy realization
 Gross margin improvement
 Working capital efficiencies
 Talent Development
 Developing a bench; next generation leaders
 Deployment of capital is most important decision
 Maintaining our price discipline is key to success

Ultimately, we are focused on delivering superior shareholder returns!

25

Organic Growth Q1, 2012 LTM SSS
Organic Growth = 8%

14%
12% 13%

10% 10%

7% 7% 6%
4% 4%

Q1'11 Q2'11 Q3'11 Q4'11 Q1'12

As Reported Same Store Sales

* Same Store Sales only include acquisitions in their first full quarter of comparison

26

Organic Growth Q1, 2012 LTM SSS
Organic Growth = 8%
25%
24%

16%
15% 14%
12% 13%
12%
10% 10%

7% 7% 6%
4% 4%

Q1'11 Q2'11 Q3'11 Q4'11 Q1'12

As Reported Same Store Sales Same Store Sales w /o Neuro & Other

* Same Store Sales only include acquisitions in their first full quarter of comparison

27

Progress on 2012 Synergy Program
Run rate
Run rate expected by
expected by Year-end
$230+ million*
mid-year
Run Rate
May 3, 2012 $200 million
Run Rate
Feb 23, 2012 $165 million

$135 million

* Includes acquisitions announced and closed in 2012
28

Synergy Capture

Timing of
Synergy Scenario Recent Examples Synergy Capture

Business is folded into Valeant Ortho, Dermik, University Medical, Eyetech,
Immediate
infrastructure in first Quarter Afexa, Atlantis

Business is "bolt-on" to Valeant
Europe (PharmaSwiss, Sanitas), Brazil
Day one and integrated into Over Time
(Delta, Bunker), Tecnofarma
Valeant infrastructure over time

Russia (GL, Natur Produkt*), Podiatry
New Platforms (PEDiNOL), SEAsia/South Africa (iNova), Over Time
Probiotica, OraPharma

* Not yet closed
29

Synergy Capture
Ortho/Dermik Example

Total Dermik Total Pre- Total Post
VRX Derm & Ortho Synergy Synergy

Headcount 213 472 685 499

OpEx $84.5 M $151.3 M $235.8 M $125.1 M

Total synergies of $110.7M achieved in Q1, 2012

30

Business Development
 Characteristics of our acquisitions
 Markets with attractive growth rates
 Durability of earnings
 We don’t bet on science
 Rigorous Financial Modeling
 Target of 20+% IRR at statutory tax rates
 Target cash payback within 5 to 6 year range
 Acquisition and restructuring costs are modeled as additional
purchase price
 Integration
 Speed is important
 The “best person” rule
 Tracking Performance
 We track revenue and synergies
 Deal model including restructuring costs becomes budget
31

Summary of 2012 YTD BD Efforts
 Large number of smaller deals
 Low risk, high IRR deals
 In aggregate, added approximately $400 million or more than 10% to run rate
revenue
 Decentralized structure allows for faster, more efficient integration
 Deals spread among regions and businesses
 4 in U.S. (none in derm)
 1 in Canada
 2 in Europe (none in Poland)
 3 LatAm (no deals in 2011)
 Many deals represent exciting new growth platforms or are material at
the local level
 PEDiNOL – Podiatry
 OraPharma – Dental
 GL and Natur Produkt* – Russia
 Probiotica – Brazil
 Acne Free – Consumer
 Eyetech – Opthalmology
 Integrations will be less costly
 No acquired manufacturing facilities other than in Probiotica
 Few people acquired (mainly sales reps) 32
* Not yet closed

Restructuring Costs &
Synergies
(Includes deals through Q1, 2012)
Restructuring, Integration
Restructuring, Integration & Projected & Acquisition Related
Acquisition Related Costs Annualized Costs % of Projected
$M Purchase Price (Q4 10 - Q1 12) Synergies Annualized Synergies

Biovail N/A 204.1 350.0 58%
Ortho/Dermik 767.0 43.7 110.7 39%
Europe (PharmaSwiss, Sanitas) 939.0 23.6 75.0 31%
Afexa
* 92.0 13.3 13.0 102%
iNova 657.0 10.0 25.0 40%
*
Probiotica 91.0 0.8 1.9 42%
EyeTech
* 22.0 0.1 5.7 2%
Total 2,568.0 295.6 581.3 51%

* Europe, iNova, Probiotica – Some additional restructuring and integration costs
related to these acquisitions are yet to be incurred

33

Our Approach to Guidance

 Provide revenue, Cash EPS, and adjusted cash flow
from operations on an annual basis
 Updates to our annual guidance are provided quarterly
 We don’t include future deal forecasts – we only include
BD that is closed or announced
 We don’t include the effect of potential changes in
exchange rates or actual gains/losses from changes in
exchange rates
 Our business is stronger in the second half of the year
 We are reaffirming our current FY guidance at the
higher end of the range
 Does not include OraPharma, Natur Produkt, Acne Free, Swiss
Herbal 34

Changes to Our Quarterly Earnings Presentation
 Earnings call moving to 8 a.m. ET
 Gain/loss from asset sales:
 GAAP EPS – Will be moved to Other Income
 Cash EPS – Will be excluded
 FX gain/losses will continue to be included, but if significant, Cash
EPS will be shown with and without
 Cash EPS will be shown with and without certain “one-time” items
(e.g. milestone payments)
 Organic growth will be shown on a Pro-Forma, Base Business, and
Base Business Without Neuro basis
 All acquisitions will be included
 Royalty payable to Meda begins in January 2013
 10% royalty on sales of Elidel, Xerese and Zovirax
Royalty payments will not affect GAAP earnings, but will be deducted in Cash
EPS calculation
 Restructuring, integration and acquisition charges will be disclosed by
deal and category of expense
 As always, our goal is clarity and transparency 35

Annual Financial Guidance for 2012

“One-timers” Included:
As of June 21, 2012

 $66M – Sale of 5FU/IDP111 (Q1)
 Revenue = $3.4 - $3.6 billion
 $45M – Retigabine milestone (Q2)
$111M

 $0.15 – Sale of 5FU/IDP111 (Q1)
 Cash EPS = $4.45 - $4.70
 $0.08 – Fx Gain (Q1)
 $0.14 – Retigabine milestone (Q2)
$0.37

 > $1.4 billion in Adjusted
Cash Flow from Operations  $66M – Sale of 5FU/IDP111 (Q1)
 $45M – Retigabine milestone (Q2)
$111M

36

Cash EPS Trends
(excluding certain “one-timers” and acquisitions)

2011 Actuals
40%
33%
31%
25% 27% 26% 27%
30% 2012 Budget
23% 21% 24% 23%
21% 19%
20%
2012
10% Consensus
Estimate
0%
Q1 Q2 Q3 Q4

80% 2011 Actuals

56% 60% 53%
60%
47% 2012 Budget
44% 40%
40%
$2.13
20%
$1.86 2012
*
Consensus
($3.99)
Estimate
0%
1H 2H

* $3.99 Cash EPS consensus estimate is as of March 22nd, 2012 and excludes $0.14 for the Q2 GSK milestone

37

Cash EPS
(excluding certain “one-timers”)

$1.28

$1.10
$1.03 $1.03
$0.96 $0.96
$0.91 $0.90
$0.88
$0.80

Q1 Q2 Q3 Q4
FY Consensus Estimate Avg 2011A/2012B Phasing
Q1'2012 Actuals
Consensus Estimate, Mar 22, 2012
Consensus Estimate, Current

*All figures above exclude the GSK milestone
**FY consensus averages are based on the March 22nd, 2012 FY guidance

38

Q2 Currency Impact
10%
AUD
5% BRL
CAD
0%
EUR
-5% MXN
PLN
-10%
RUB
-15% RSD
ZAR
-20%
11/03/11 Q1 Avg April 2012 May 2012 6/7/2012
Spot Avg Avg Spot

Based on internal forecasts as of Q1’12
earnings call, declining currencies are
expected to have a negative Q2 impact of $0.03
Cash EPS and $15M revenue 39

Q2 Currency Impact 2012 vs. 2011
“Year over Year Declining Rates”

AUD BRL CAD EUR MXN PLN RUB RSD ZAR
0%

-5%

-10%

-15%

-20%

-25%

-30%
Compared to Q2’11 exchange rates, declining currencies have a negative
Q2’12 impact of $55 - $60 million revenue and $0.05 - $0.06 Cash EPS

40

Adjusted (Non-GAAP) Cash Flow
from Operations
 GAAP Cash Flow from Operations, adjusted for:
 Cash Payments Relating to Restructuring/Integration/Acquisition costs, Legal
Settlements, and IPR&D payments
 One time working capital changes relating to business development activity
(where A/R and Inventory are not acquired)

 In Q1 12, adjustments to GAAP Operating Cash Flows were $88.0 M, of which
$87.3 M was related to Restructuring/Integration/Acquisition costs:
Ortho/Dermik 26.9
Biovail Merger (closure of old Biovail HQ) 25.9
Europe (PharmaSwiss, Sanitas) 11.9
Afexa 9.5
iNova 9.3
Manufacturing Integration (Various Deals) 1.9
Probiotica 0.3
Eyetech 0.1
Other 1.5
Total $ 87.3

 If we stopped all BD activity, restructuring/integration/acquisition costs
would trend to zero.
41

Q1 Restructuring, Integration and
Acquisition Related Costs
Q1 Amount
Expense Type Paid (millions) Comments
Facility Closure Costs 22.6 Relates to closure of Mississauga facility. $12.4 M was accrued for in previous quarters.

Acquisition Related Costs 19.8 Includes payments for legal fees and advisory services associated with Dermik, Ortho, and
iNova transactions ($17M) accrued in previous quarters.
Severance Payments 19.7 iNova $8.1M, Ortho/Dermik $6.2M, Europe $3.3M, Other $2.1 M

Integration related consulting, duplicative 10.7 Duplicative Labor (Europe, Canada) $3.2M, IT Integrations costs and Transition Services $5.1
labor, and other M, Integration Related Consulting (Dermik/Ortho) $2.4 M

Contract Termination 3.2 Termination of contracts associated with Mississauga facility $1.6M, Other smaller items
$1.6M

Manufacturing Integration Costs 1.8 Related to integration of Delta and Bunker facilities in Brazil

Travel/Other 1.4

Payments of Integration Costs accrued in 8.1 Includes Integration related consulting, duplicative labor, contract termination and
previous quarters manufacturing integration costs accrued for in previous quarters
Total 87.3

42

Topics to Cover
 Financial Performance
 Established track record of financial performance
 We have a growing, profitable business model

 Organic Growth
 Both the base business and acquired businesses are growing, although there will be
quarter - quarter fluctuations
 March 31st, 2012 LTM base business organic growth is 8% - “Same Store Basis”

 A disciplined approach - high IRR’s and short payback periods
 Timing and amount of synergy capture and restructuring charges depends on the type of
deal
 BD effort to date has added significant revenue and new growth opportunities

 Guidance
 Excluding the impact of acquisitions, 40-45% of Cash EPS is generated in 1st half of year
 FX has been a headwind
 We are re-affirming high end of guidance from our Q1 earnings call

 Changes to our quarterly presentation
 We have taken your suggestions seriously
43

Questions?

J. Michael Pearson
Howard Schiller

Business Overview

Rajiv De Silva
President, Valeant Pharmaceuticals International, Inc.
Chief Operating Officer, Specialty Pharmaceuticals

Investor Day
June 21, 2012

Executive Summary
 Pharmaceutical market gives Valeant a large canvas upon
which to implement a unique strategy
 $700B+ IMS reported, but likely $1-2 trillion when adjacent categories
and unreported sales are included
 Highly fragmented, with a substantial component in private companies
 Fundamental shift in growth rates among global markets
 Emerging markets most attractive
 Developed markets are slowing (e.g., Western Europe)
 But, still some attractive niches in the U.S., Canada and Australia
 Valeant strategy has focused on re-shaping its footprint in light
of market dynamics
 Exit / avoid low growth markets, e.g., Western Europe, Japan
 Focus efforts in the U.S. on niche platforms, e.g., Dermatology
 Canada and Australia offer opportunistic platforms through acquisitions /
mergers – Biovail and iNova
 Focus on high growth emerging markets – Latin America, Central and
Eastern Europe, South East Asia, South Africa
48

Future Growth Will be Most Attractive in Above median
Below median
Emerging Markets
Projected pharma
GDP growth Projected GDP spend growth
(2008-2011)1 growth (2012-16)1 (2012-2016, CAGR)1

Asia (ex Japan) 7% 7% 12%

Latin America 3% 4% 11%

Africa 2% 4% 10%

Central & Eastern Europe 1% 3% 8%

US & Canada 0% 2% 2%

Australia 2% 3% 1%

Japan -1% 1% 1%

Western Europe 0% 1% -2%

1 Real GDP growth; Pharma spend growth in constant US dollars
Source: Economic Intelligence Unit (EIU); BMI 49

Investment Focus
 Niche markets that fit strategy
 Dermatology
 Podiatry
U.S.  Ophthalmology
 Dentistry
 Orphan

 Avoid primary care
 Broad presence given legacy Biovail / Valeant capabilities
Canada  Aggressive in-licensing to leverage infrastructure
 Build Consumer business

 Broad presence given legacy iNova / Valeant capabilities
Australia
 Bolt-on acquisitions in Consumer

 Increase critical mass in Brazil and Mexico
Latin America
 Look for new market expansion opportunities (e.g., Colombia)

 Growing “anchor markets” – Poland, Serbia
Central Europe
 High growth emerging markets – Russia, CIS

 New platform from iNova acquisition
South East Asia  Strengthen existing hubs (e.g., Malaysia and Philippines)
 Enter new markets (e.g., Indonesia, Vietnam)

 New platform from iNova acquisition
South Africa
 Strengthen hub in South Africa
50

Valeant Has Grown by Focusing on High
Growth Countries / Niche Markets
Valeant stock price* (Adjusted Close – $USD); selected deals

**Adjusted for Valeant/Biovail merger. Line denotes share price plus the special dividend paid to Legacy Valeant shareholders related to the Biovail merger.
51

Business Unit Overview

U.S. Canada / Australia Emerging Markets

Central /
Latin Asia /
Eastern
America Africa
Europe
 Rx Dermatology  Canada  Poland  Mexico  South Eas
 Consumer
 Australia  Russia /  Brazil Asia
 Aesthetics
 Podiatry CIS  South
 Dentistry  Serbia Africa
 Ophthalmology
 Neurology / Other  Balkans /
Other
~$1,700 ~$600 ~$760 ~$360 ~$100

2012 Revenue
52

Case Study: U.S. Podiatry
PEDiNOL, A Valeant Company
 ~$1B U.S. market (2011)  Founded in 1925
 Fragmented with no big pharma  ~$50M* in sales
presence  Most recognized name in
 3-5% growth projected podiatry: PEDiNOL
 ~25 person highly respected
 17,000+ podiatrists in the U.S. sales force
 Broad potential for offerings  Key products
 Rx products  Ertaczo (Athlete’s Foot)
New
 OTC/cosmetics  Gris-PEG (Athlete’s Foot)
 Dietary supplements  CeraVe SA
 Wound care  Nalfon (pain)
 Orthotics / Diabetic shoes / braces  Various OTC
 Equipment for in-office procedures  Integration targets achieved
 Severances completed
 High cash pay potential
 National Sales Meeting on 6/11/12
to kick off new unit
* Includes Valeant podiatry products 53

Latin America Overview
Mexico
 Population: ~115M
 Healthcare spend: $605 / Capita / Year
 Pharmaceutical market: ~$20B
 Cash pay: 75% of total spend

Brazil
 Population: ~195 M
 Healthcare spend: $990 / Capita / Year
 Pharmaceutical market: ~$25B
 Cash pay: 70% of total spend

54

Valeant Brazil—Overview
 Market size ~ $25B  2012 revenues of ~$150M
 High growth outlook ~10-12%  Legacy Valeant
 Branded Gx
 Well regulated environment
 OTC
 Affluent segment of population  Dermatology
with high disposable income
 Acquired Branded Gx
 High proportion of out-of-  Bunker and Delta (Regederm)
pocket expense (~70%)  Branded Gx

 Government reimbursement  Probiotica
system providing broad access  Sports nutritionals
 Physicians and pharmacists are  High growth business

important points of influence  2009 – 2012 growth of 88%
CAGR
 Organic growth of ~15% projected
for 2012
55

Valeant Mexico—Overview

 Market size ~$20B  2012 revenues of ~$210M
 Strong growth outlook ~7%  Legacy Valeant
 Government reimbursement  Branded Generics
broadly in place, but largely a  OTC
cash pay market  Bedoyecta – Vitamin B
 High proportion of out-of-  Tecnofarma
pocket expense (~75%)  Generics / Branded generics
 Strong branded generics  Atlantis
market  Branded generics
 Substantial influence of  2009 – 2012 growth of 17%
pharmacists and concentrated CAGR
retailers and wholesalers  Organic growth of >10% projected
for 2012

56

Further Opportunities for Expansion
Exist in Latin America Valeant market Valeant not present Expansion Opportunity

Projected Rx/OTC Growth
CAGR (2012-16)
15

Paraguay Venezuela Argentina
10 Brazil
Ecuador
Nicaragua
Bolivia Colombia Mexico
Peru Chile
5
El Salvador
Guatemala
Costa Rica
Honduras
0
0 1 2 3 4 5 6 7 8 9 10 11 12 26
Current Rx/OTC Market Size
2011, Dollars Billion
Source: BMI 57

Emerging Markets –
Central and Eastern
Europe
Pavel Mirovsky
President, Valeant Europe

Investor Day
June 21, 2012

Geographic Footprint CEE, Russia, CIS

 Population = 340 million people
 Pharmaceutical Market = $31B
 Territory of 8,567,284 square miles 60

PharmaSwiss and Sanitas Acquisitions Have Created a
Broad Eastern European Footprint
Valeant market Valeant not present Expansion Opportunity

Projected Rx/OTC Growth
CAGR (2012-2016)
16
14
Kazakhstan
12
10 Ukraine
Belarus Romania Russia
8
Bulgaria Turkey
6 Serbia Poland
Latvia
4 Slovenia
Czech Republic
2 Croatia
Lithuania Slovakia
0
Hungary
Western Europe
-2
0 2 4 6 8 10 12 14 16 18 20 272 274
61

Business Strategy
 Business model consistent with Valeant philosophy
 Durable branded generic business
 Rich pipeline, rapidly growing number of new
launches
 Operational and market access excellence
 Aggressive, but disciplined, BD and M&A activities
 Execute synergies – on time and in full
 Out-pace both the market and the competitors
 Focus on key geographies in CEE
 Russia & CIS, Poland, Serbia,
 Explore Middle East North Africa (MENA) potential
 Avoid Western Europe
62

Where We Rank in The CEE Market
Rank Company Market Share

1. Novartis 7.9%

2. Sanofi-Aventis 7.0%

3. Roche 4.7%

4. Teva 3.8%

5. GSK 3.7%

6. Servier 3.7%

7. Pfizer 3.3%

8. Bayer 2.9%

9. KRKA 2.7%

10. Abbott 2.7%

……..

15. Valeant Pharmaceuticals 2%

63

Business Summary
Region Revenues # Sales Reps % Govt
(2012e) Reimbursement
Poland ~$200 M 325 ~30%

Serbia ~$100 M 90 ~45%

Russia/CIS/ ~$200 M 525 ~20%
Adriatics

Central Europe ~$135 M 215 ~40%

All Other ~$65 M 0 Partnered

Total Valeant ~$700 M 1155 (85%*) ~30%
Europe

* % of total headcount, excluding manufacturing 64

Product Mix - CEE
2012e

Specialty, OTC, 29%
34%

Primary,
37%

Drivers of Change:
 Reduced dependence on very competitive cardiovascular segment
 Significant penetration into dermatology
 Entry to niche segments as ophthalmology and gastro-enterology
 Significant growth in oncology driven in Ex-Yugo and Baltic markets and
launches of licensed innovative oncology portfolio
65
 Continuing focus on OTC

Poland
 The new pharmaceutical law has had a dramatic
short term negative impact on Polish market
 2012 forecast predicts no growth for retail market
first time in 20 years
 Week 1-10: (18.8%) in value,
 Week 11-20: ~(4%)
 Full year expected at zero growth 2011/2012
 Valeant one of few companies that continue to grow
 May +4% (YTD)
 2012-2016 Polish market expected CAGR >5%
 Forecasted Valeant organic growth is expected to significantly
outpace the market

66

Branded Generics Example: 250+ launches per
year planned in Central and Eastern Europe

Example Product Indication Market

Benzydamine lozenges / Spray Throat inflammation Multiple markets

Ketoprofen ER tablets / Spray Inflammatory pain Multiple markets

Mometasone / Cream, Solution Skin inflammation Multiple markets

Telmisartan-HCTZ / Tablets Hypertension Multiple markets

Azithromycin / ODT Respiratory tract infections Multiple markets

Brimatoprost / Eye drops Glaucoma Multiple markets

Terbinafine / Tablets Antifungal Multiple markets

67

Business Development Opportunities

 Purchasing Dossiers
 ~$70,000 expense per dossier (on average)
 Representation business
 Eisai oncology
 In-licensing products
 Ipsen GI, dermatology, oncology
 Small acquisitions
 Chemo Iberica’s diabetes drugs in Russia
 Mid-size acquisitions
 Gerot Lannach (Russia/CIS)
 Natur Produkt (not yet closed)

68

5 Year Aspirations
 Become a top 10 pharma in CEE
 (>5% market share, >$2 B turnover)
 Focus on Russia, Russia, Russia, Poland, Ukraine,
Kazakhstan, explore MENA potential
 Shift focus to OTC, niche markets (dermatology,
ophthalmology) and enter biosimilars
 Maintain double digit organic growth, coupled with
intensive BD/M&A
 EBITA growing from 31 – 37% (base case) to 31 -
41% (aspirational)

69

Emerging Markets -
South East Asia and
South Africa
Andrew Howden
CEO, iNova
Valeant, South East Asia, South Africa and Australia
Investor Day
June 21, 2012

Valeant Asia / Africa Pacific Footprint
Valeant Distributor or licensing
presence partner

South Korea – A$2.6m, Japan – A$6.7m,
China – A$1.0m, 2 Partners 2 Partners
2 Partners

Taiwan – A$0.6m,
1 Partner

Vietnam –
2 Partners

Philippines – A$6.1m,
5 employees + sales
outsourced

Thailand – A$6.8m, Hong Kong – A$3.0m,
2 Partners 7 employees

Singapore – A$5.4m,
Other African markets – 9 employees Indonesia –
Partners Malaysia – A$11.0m, Begin 2012
26 employees

South Africa – A$37m
37 employees

Notes:
1 All employee figures are as at June 2012
2 Country sales figures are excluding royalties (SEA) and acquisitions 72

Our Focus Has Been on High Growth Markets With
Opportunities for Future Expansion
Valeant market Valeant partners Expansion Opportunity

Projected Rx/OTC Market Growth
CAGR (2012-16)
15
Vietnam India China

10 Indonesia
Malaysia

Hong Kong South Africa
5 Thailand
Singapore Philippines South Korea
Taiwan Japan
0
0 2 4 6 8 10 12 14 66 68 126 128
Source: BMI, company data
73

Business Summary - Established and Growing
Businesses in Key Asian Markets

Region # Sales Reps Key Products % Govt
Reimbursement

Difflam, Duromine, Nuelin, <10%
Malaysia 17
DuroTuss
<30%
Thailand 29 Norgesic, Nuelin

38 0%
Philippines Difflam, Norgesic

0%
Singapore 5 Difflam, DuroTuss, Duromine

4 Difflam, DuroTuss, Tambocor 0%
Hong Kong

Source: Market data 74

Valeant Growth Exceeds Market
Growth in Asian Markets
Valeant YTD MAT Market YTD MAT
Country Growth Growth
Q1’12 Q1’12
Thailand +24% +3%

Philippines +23% +6%

Malaysia +24% +12%

Singapore +8% +3%

Hong Kong +15% +10%

Source: IMS 75

Branded Generics Showing Strong Growth
Across Asian Market
Sales (USDm) APAC Sales breakdown by originator
80,000 CAGR Why Brand Matters
72,211
• In mature markets
63,787 unbranded generics
19,173 Unbranded Gx 21% represent fastest
60,000
54,767 15,958 growing segment
46,274
• Brand is associated
12,721
with quality and can
39,196 9,870 command a higher
40,000 26,873 Branded GX 16%
7,965 23,645 price
20,160
16,886 • In less mature
14,027 markets generics as
20,000 a whole represent a
26,165 Originals 11% greater share – given
21,886 24,184
17,204 19,518 price concerns
• Branded generics are
0 both larger and
2007 2008 2009 2010 2011 Overall 15%
faster growing than
unbranded

Source: The APAC Pharmamarket; Connecting the dots, July 2011
76

Consumers in Asia Pacific Show a High Propensity
to Self-medicate – Strong OTC Segments
Asia Pac OTC Market Value CAGR
Value share, percent (2007 - 2011), %

Vitamins & Minerals 15.8 ~4

Non-narcotic Analg. 7.4 ~5

Dietetics 6.3 ~6

Cold Preps 5.1 ~4

Chinese Medicines 4.4 ~20

Allergy 3.3 ~6
Expectorants 3.2 ~4

All other therapeutics 3.0 ~20
Antacids 2.8 ~1

Anti-rheumatics, topical 2.4 ~-1

Source: IMS Health MAT Dec 2011; OTC only 77

Product Focus Remains With Weight Control,
Dermatology, Cough, Throat and Pain Products
2012e
Specialty,
18%

OTC, 52%

Primary,
30%

Drivers of Change:
 Focus on sales and marketing as a competitive advantage
 Build key account management
 Difflam, Durotuss and Duromine key growth drivers (throat, cough and weight
management)
 Take a position of Professional Endorsement for brands
 Extend product life cycles with Product Development
78

Key Market / Environmental Factors
South Africa
 High growth market - +5-10%
 Consistent market growth through volume and price
increases
 Established brands, growing pharmacy segment with
strong OTC brands
 Introduction of the National Health Insurance (NHI) to
enable broader access to healthcare and medication
 International Benchmark Pricing (2013) will result in
3-4% one-off loss from total private sales turnover
 Protracted regulatory process at Medicines Control
Council (MCC) current backlog of more than 4,000
applications at the MCC
79

Valeant Is One Of The Fastest Growing Pharmaceutical
Businesses in South Africa
40
Valeant growth evolution vs. leading South African companies International MNCs

Average MAT Q1 2011 PPG= 6.6% S.Africa MNCs

30 LUPIN
AZ
CIPLA Valeant
25
2006-2010 Sales CAGR

LILLY

MERCK
KGAA
20 BI
Sanofi
SA ASPEN
ROCHE PFIZER
J&J
15
ABBOTT

J&J NOVARTIS Average 2006-2010
ADCOCK CAGR=13.1%
10 NOVO
BMS BI

5 PFIZER GSK
MSD
SERVIER BAYER

0
(10) (5) 0 5 10 15 20 25 30 35
MAT Q1 2011 Annual Sales Growth
Source: IMS MAT Mar-2011 , LHS based on AUD, RHS based on ZAR 80

Five-Year Aspirations
 Rank in top 10 in key markets – South Africa, Thailand,
Philippines, Indonesia, Malaysia
 Target of $500m sales
 Enter new markets and establish brands in Indonesia and
Vietnam
 Aggressive acquisition plans to speed growth
 Launch global Valeant brands in Asia and Africa – CeraVe, Dr
Lewinns, Dermaveen, Hamiltons Sun and create strong skin
position
 Patient/customer value at the core of everything we do
 Maintain focus on sales management
 Professional endorsement of brands as a key marketing focus
 Balanced portfolio of OTC and Prescription brands to suit Asia
and African markets
 Supply Chain optimization and efficient/lean operational
structure 81

Questions?

Panel:
Pavel Mirovsky Andrew Howden
Javier Rovalo Carlos Picosse
John Connolly

U.S. Rx Dermatology

David Mullarkey
Senior Vice President & General Manager,
Valeant Dermatology
Investor Day
June 21, 2012

U.S. Rx Dermatology Business Overview
 Top tier U.S. Dermatology business
– Top 3 in U.S.
– 5 year sales growth CAGR of ~59% -- fastest growing top
Derm company
 Focused on three key segments
– Acne
– Dermatitis
– Anti-virals
 Strong Pipeline/Expansion Opportunities
– Efinaconazole (IDP-108) – Potential to be breakthrough
onychomycosis treatment
– Multiple lifecycle management efforts
– Potential new areas: skin cancer, psoriasis, fungal infections
of the skin 85

U.S. Dermatology Market Dynamics
 General
– Large (~$9B), but low growth market 
– Low big Pharma presence 
– Fragmented competition/many small players 
 Prescribers
– Relatively focused target list 
– Relationship-oriented/industry-friendly 
– Growing influence of PA’s/nurses 
 Coverage
– Relatively low government reimbursement 
– Increasing self-pay component 
– Increasing managed care controls 
– High use of co-pay assistance programs 
 Innovation
– Predominantly through formulation innovation 
– High barrier to generic entry, though some regulatory changes ongoing 

86

Valeant Is Now Top Tier Rx Dermatology Player

2008 - Top 15 (Based on Gross Sales) 2011 - Top 15
Galderma Medicis*
GSK (Stiefel) Galderma
Medicis Valeant
Nycomed
Sandoz/Novartis
Graceway
GSK (Stiefel)
Warner Chilcott
Warner Chilcott
Astellas
Allergan
Ortho derm
Dermik
Leo Valeant #3
Allergan Astellas
Valeant Valeant #11 Merz
Merz Intendis/Bayer
Triax Onset
Intendis/Bayer Promius
Pedinol Aqua
-$100 $100 $300 $500 $700 $900
$0 $200 $400 $600 $800 $1,000 $1,200

Source: Wolters Kluwer Health Integrated AWP Dollars for Rx Derm Products Only - May 2012
*Medicis: gross sales only, excludes aesthetics and Rx reported 2011 net sales ~$500M
**Allergan excludes aesthetics 87

Valeant Segment Strategy
Market/Environment Strategy

– Co-pay programs mandatory – Convert BenzaClin to
– Increased cost of access within Acanya
Acne managed care plans – Focus on
~$3.2B – Continued growth of PA/NP Acanya/RAM/Atralin
influence lifecycle management
– Continued increase in non-Rx – Manage RAM/Atralin as
acne treatment options a portfolio

– Market shifted back to topical – Return Elidel to growth
steroids – Maximize CeraVe use in
Dermatitis – TCI market (Elidel) very combination treatment
promotionally sensitive regimens
~$1.5B
– Combination treatment is rule
– Non-prescription options (e.g.,
CeraVe) established as critical
components of regimen

– Accelerate Xerese
– “Inch deep, mile wide” launch
– Unmet need for more effective – Convert Zovirax to
Anti-viral topical for HSV-1 Xerese
~$2.3B – High use of OTC medications – Expand Xerese
– Increasing patient interest in indications
topical vs. oral therapies
88

Key Current Products – Focus of Growth

89

Valeant U.S. Dermatology Growth
Net Sales Millions (USD)

~67%
CAGR

Note: Includes entire Valeant U.S. Dermatology segment
90

Key Changes in Rx Dermatology
Business Over Time
2008 2012

91

Maintaining Growth During Acquisitions
in U.S. Dermatology
50%
2012 vs. 2011 Volume Growth 44%
40%
40% 38% 37%

33%
29%
30%
MAT
May
20% 18% 2012

9%
10%

3% 3%

0%
VRX Retinoid Acanya Atralin Zovirax/Xerese* CeraVe**
Franchise

*Zovirax/Xerese volume in TRx grams; **CeraVe scan volume growth

Source: Wolters Kluwer Health; IRI Scan data; Retailer data – May 2012 92

Promotional Efforts Turning the Elidel Growth
Curve
Elidel YOY TRx Growth All Prescribers Elidel YOY TRx Growth Dermatologists

Source: Wolters Kluwer Health May 2012 93

Key Priorities for 2012
 Successfully integrate Ortho, Dermik and Coria and create
high-performing field sales organization optimizing multiple
brands
 Create growth brands out of Elidel and Xerese
 Grow retinoid portfolio of Retin-A-Micro/Atralin
 Convert BenzaClin business prior to patent expiry
 “Introduce” new Valeant Dermatology and align external
presence/perception with our industry leadership ambition
 Accelerate life cycle management options for existing
brands
 Extensive launch planning for efinaconazole (IDP-108 -
onychomycosis)

94

R&D Update

Susan Hall, Ph.D
Senior Vice President, Global R&D

Investor Day
June 21, 2012

R&D Operating Principles
Lower risk / niche
Diverse portfolio
opportunities

Major focus on
lifecycle
management

Lean operating
Extensive topicals
model
expertise driver of
supplemented with
internal innovation
partnerships

Leverage R&D
globally

97

R&D – Excellent Productivity Track
Record
As measured by: R&D spend
 Disciplined R&D budget and
2010 2011 2012e
associated FTEs relative to revenue (proposed)

 Successful rapid integration of U.S. $36.5 M $57.4 M $70 - $85 M

products that are acquired Non U.S. $19.1 M $8.3 M $20 - $25 M

 Executing on numerous pipeline
Total Spend $55.6 M $65.7 M $90 - $110 M
activities
 Multiple successes to date, e.g. Spend as %
Sales
5% 3% ~3%

Acanya, IDP-111, Potiga/Trobalt,
CeraVe line extensions,
efinaconazole (IDP-108), Sublinox,
Lodalis, Regederm
 Ensuring ongoing support of the
portfolio 98

Diverse Portfolio Driving The Business
Examples
Targeted NCE development efinaconazole (IDP-108)

Novel therapies utilizing currently approved products IDP-118

New formulations and delivery technologies Potiga XR

Acanya, Atralin, Elidel,
New indications / market expansions opportunities Zovirax lifecycle
management

Central & Eastern
Generics / Branded Generics Europe portfolio
99

Efinaconazole (IDP-108) / Onychomycosis
(1/2)
 Onychomycosis is a progressive fungal infection of the nail bed
 Caused mostly by dermatophyte fungi, but also yeasts or molds
 Represents 50% of all nail disorders & frequently involves
several nails
 Current treatment challenges are many
 Need for medication to reach infection site under nail
 Clinical efficacy is based on nail appearance, which grows slowly
 Two phase 3 studies completed: primary efficacy outcome of
complete cure at week 52 (48 weeks treatment with 4 weeks
follow up) vs. placebo:
 Statistically superior (p<0.001) to placebo for all primary and secondary
endpoints
 Efinaconazole was generally safe and well tolerated
100

Efinaconazole (IDP-108) / Onychomycosis
(2/2)
 Submission to FDA 3Q 2012; other countries planned -
Canada, Brazil, Mexico, Central Europe
 Valeant has rights to North & South America and EU countries

 W. Europe submission requires evaluation vs. an already
approved product – active partnering discussions underway

 Phase 3 and other data targeted for top specialty journals
plus presenting at national dermatology and podiatry
conferences

 Efinaconazole is a potent anti-fungal with the potential for a
broad range of additional multiple indications
101

CeraVe® ― Premium Line
of Skincare Products

 Designed to restore and repair the skin barrier for healthier skin
 Innovation-driven approach:
 Meeting patient / consumer needs with superior formulations
designed to restore and repair the skin barrier
 All new products have driven incremental sales due to
focusing on different skin disease states
 All innovations were developed by Dow Pharmaceuticals with
input from leading dermatologists
 We are actively progressing other opportunities to meet
unmet needs in the marketplace
102

Brazil
Regederm®: Treatment & healing of wounds
 Launched in Brazil, April 2012
 Prescription product Indicated for the
acceleration of wound healing and tissue
regeneration properties
 Gel cream formulation – consists of
bioactive protein fractions of latex serum
derived from the rubber tree
 Mechanism of action:
 Stimulates angiogenesis
 Inhibits collagenase
 Valeant is evaluating opportunities to
launch Regederm® in other regions,
patents pending worldwide
103

Questions?

Panel
Dave Mullarkey Alissa Hsu-Lynch
Tom Schlader Susan Hall
Ryan Weldon Dan Spira
Janet Vergis Julie Kang

Conclusion

J. Michael Pearson
Chairman and Chief Executive Officer

Investor Day
June 21, 2012

Parting Thoughts
 Quarterly trends suggest second half of year will
deliver 60%+ of our Cash EPS
 We continue to have solid organic growth in both
Poland and the rest of CEE
 Integration in U.S. Dermatology is complete -
growth in key dermatology brands is
accelerating
 Efinaconazole (IDP-108) – topical, generally
safe and well-tolerated, met complete cure
endpoint (not yet FDA approved)

107

Thank You For
Your Support!

108

GAAP EPS vs. Cash EPS
 Adjustments:
 Non-Cash Items
 Amortization
 Intangible Assets
 Deferred Financing Costs
 Debt Discounts
 Inventory Step Up (Acquisition related)
 Contingent Consideration Fair Value Adjustment (Acquisition related)
 Stock Based Compensation Fair Value Step Up (Acquisition related)
 Deferred Taxes
 “Non-recurring” charges:
 Restructuring and Integration Charges
 Acquisition-related Transaction Costs
 Legal Settlements
 IPR&D (Cash and non-Cash)
 Gain/loss on early extinguishment of debt

 Non-Cash items included in Cash EPS
 Stock Based Comp
 Depreciation
111

Restructuring, Integration and
Acquisition Related Costs
 “Acquisition-related Restructuring and Integration Costs”:
 Employee severance and/or relocation
 Contract termination costs
 Costs to consolidate or close facilities (including manufacturing)
 Other associated costs:
 Duplicative labor during transition period
 Professional fees (consulting, temporary labor)
 Systems integration costs
 Travel related costs for which the primary purpose is related to
integration

 “Acquisition-related Transaction Costs”:
 Professional fees for advisory, brokerage, legal, accounting, valuation
 Travel related costs for which the primary purpose is related to the
acquisition

112

Presentation of Non-GAAP
Adjustments

Alliance Amortization of
product Contingent Restructuring, deferred financing
assets & Stock-based consideration acquisition- Amortization & costs, debt (Gain) Loss on
Inventory pp&e step- compensation fair value related and other Legal other non-cash discounts and ASC extinguishment
step-up up step-up adjustment costs settlements charges 470-20 interest of debt Tax
Product Sales -- -- -- -- -- -- -- -- -- --
Cost of goods sold X X X -- -- -- X -- -- --
Cost of Alliances -- X -- -- -- -- -- -- -- --
Selling, general and administrative ("SG&A") -- X X -- -- -- X -- -- --
Research and development -- X X -- -- -- -- -- -- --
Acquired in-process research and development -- -- -- -- -- -- -- -- -- --
Legal settlements -- -- -- -- -- X -- -- -- --
Contingent consideration fair value adjustments -- -- -- X -- -- -- -- -- --
Restructuring, acquisition-related and other costs -- -- -- -- X -- -- -- -- --
Amortization of intangible assets -- -- -- -- -- -- X -- -- --
Interest expense, net -- -- -- -- -- -- -- X -- --
(Gain) loss on extinguishment of debt -- -- -- -- -- -- -- -- X --
Tax -- -- -- -- -- -- -- -- -- X

113

Pro Forma Adjusted Income (Non-
GAAP)
$M Q1 10
Legacy Biovail

Q2 10 Q3 10 Q1 10
Legacy Valeant

Q2 10 Q3 10 Q1 10
Combined

Q2 10 Q3 10

GAAP Net income (loss) from Continuing Operations $ (3.2) $ 34.0 $ (207.9) $ 35.6 $ 32.2 $ (176.0) $ 32.4 $ 66.2 $ (383.9)

Non-GAAP adjustments:
Inventory step-up - - - - 2.5 3.2 - 2.5 3.2
Other amortization and non-cash charges 2.8 2.7 2.6 - - - 2.8 2.7 2.6
Stock-based compensation step-up - - 20.9 - - - - - 20.9
Restructuring and other costs 0.6 2.9 95.9 0.5 2.0 28.3 1.1 4.9 124.2
Acquired in-process research and development 51.0 10.2 - - - - 51.0 10.2 -
Acquisition-related costs - 7.6 28.0 0.5 8.7 66.5 0.5 16.2 94.6
Legal settlements - - 38.5 0.5 1.0 1.0 0.5 1.0 39.5
Amortization of intangible assets 33.3 33.3 35.5 19.3 22.3 26.0 52.6 55.6 61.5
Amortization of deferred financing costs, debt discounts
and ASC 470-20 (FSP APB 14-1) interest 4.1 4.2 3.8 2.0 2.0 1.8 6.1 6.2 5.6
Loss on early extinguishment of debt - - - - - 205.6 - - 205.6
(Gain) loss on investments, net 0.2 0.4 5.0 - - - 0.2 0.4 5.0
Write-down of deferred financing costs - - 5.8 - - - - - 5.8
Tax 4.3 0.7 59.5 (5.7) (13.8) (112.9) (1.4) (13.1) (53.4)
Total adjustments 96.3 61.9 295.6 17.2 24.8 219.5 113.5 86.7 515.1

Adjusted Income (Non-GAAP) $ 93.2 $ 95.9 $ 87.7 $ 52.8 $ 57.1 $ 43.5 $ 146.0 $ 153.0 $ 131.2

114

Organic Growth Summary

Q1, 2011 Q2, 2011 Q3, 2011 Q4, 2011 Q1, 2012 LTM (Q1, 2012)
CY PY % Change CY PY % Change CY PY % Change CY PY % Change CY PY % Change CY PY % Change
Product sales, as reported $570 $418 37% $654 $489 34% $768 $500 54%
Acquisitions (add to PY) $67 $120 $211
Exchange -$16 $14 $16
Total organic, as reported N/A N/A $555 $485 14% $669 $608 10% $785 $711 10% N/A

Q1, 2011 Q2, 2011 Q3, 2011 Q4, 2011 Q1, 2012 LTM (Q1, 2012)
CY PY % Change CY PY % Change CY PY % Change CY PY % Change CY PY % Change CY PY % Change
Product sales, as reported $521 $431 21% $563 $491 15% $570 $418 37% $654 $489 34% $768 $500 54% $2,556 $1,898 35%
Acquisitions (deduct from CY) -$55 -$24 -$88 -$118 -$275 -$18 -$505 -$18
Exchange -$8 -$27 -$16 $14 $16 -$12
Total organic, excl. acquisitions $459 $431 7% $512 $491 4% $467 $418 12% $551 $489 13% $509 $483 6% $2,039 $1,881 8%
Less: neuro -$178 -$186 -$196 -$201 -$183 -$202
Total organic, excl. acquisitions & neuro N/A N/A $289 $232 25% $355 $287 24% $327 $281 16% N/A

115

Integrating New Acquisitions –
Ortho Dermatologics/Dermik
– Introductions/communications
– Share integration timelines
Day 1 – Announce senior management team
– Town hall – company name, cultural introduction.
– Transition critical control functions to Valeant
(e.g., order-to-cash, contract approvals)

– Define new portfolio and marketing strategy
First 30-45 – Set new budgets (incorporating synergy targets)
– Adjust territory alignments/incentive plan
Days – Finalize sales management selections
– Communicate offers/complete all terminations
– Complete all product, policy and process training
– Conduct National Sales Meeting to launch
integrated business

– Target list refinement
Next 60 – Cultural integration/team building
Days – Process improvement
– Shift transition services from sellers (e.g., supply
chain, medical, sales support) 116

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