Greenberg: Will Valeant Overdose on Acquisitions?

This story first appeared on Real Money at 9:00 AM on Jan.15.

SAN DIEGO (TheStreet) -- If you've never heard of Valeant Pharmaceuticals (VRX), maybe you've heard of its predecessor Biovail, which for years was among the most controversial drug companies. Or perhaps you've heard of the more than 60 acquisitions Valeant has done in six years, including its most recent deal -- to buy Bausch & Lomb, the maker of eye-related products.

It's a classic and unabashed rollup of companies in the specialty pharma sector -- and, with the Bausch & Lomb deal, pharma in general, if not more.

Valeant has a top-notch roster of investors, including ValueAct, and its stock has been nothing short of a jaw-dropper. And for good reason: The company has executed on a strategy of creating growth in pharmaceuticals by emphasizing acquisitions rather than expensive research and development.

The role of serial acquirer started under CEO Michael Pearson, a former McKinsey consultant who joined the company in 2008. The transaction with Canada-based Biovail, which technically bought Valeant, was a pivotal one -- not because of Biovail's products, but because of its uber-low tax structure, thanks to its biggest subsidiary being based in Barbados. That tax structure has since been restructured to include Bermuda and other countries. Its tax rate of around 3% gives it an edge on the roughly 20% tax rate of its peers.

Since Pearson's arrival, Valeant's market value has zoomed to more than $40 billion from around $1 billion previously. With this, the company has reached what Pearson had called a "high-aspiration" goal of Valeant becoming among the top 15 pharma companies by the end of 2013.

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