Pharmaceutical giant Bausch Health Cos. has retained advisers to help it map out its future after the company lost a major patent dispute and has drawn controversy over the recent spinoff of its eye-care business, WSJ Pro Bankruptcy reported. Canada-based Bausch said yesterday that it hired law firm White & Case LLP and investment bank Houlihan Lokey Inc. to advise on strategic alternatives. Last month Bausch lost a legal dispute over a patent it holds on gastrointestinal tract drug Xifaxan, known as rifaximin, to treat irritable bowel syndrome. Losing the patent battle means Bausch will likely face competition from generics manufactured by companies like Morristown, N.J.-based Alvogen Inc. Bausch has already launched an appeal to the decision. “We expect that generic competition will enter the market no later than year-end 2024 — much earlier than our previous base-case assumption of January 2028,” S&P Global Ratings analysts wrote in a recent report after the ruling. They also estimated that Xifaxan contributes to about 50% of Bausch’s total pretax earnings. The potential revenue drop from Xifaxan adds additional pressure on the company as it faces an uproar from its creditors over the spinoff of its eye-care business, Bausch + Lomb Corp., which saw a limited initial public offering of shares this spring. Bausch pursued the spinoff at the behest of activist investors Carl Icahn and Glenview Capital Management. Unsecured creditors have hired law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP to advise them on possible legal claims stemming from the spinoff, which they contend transferred value away from them, according to people familiar with the matter. They have already communicated their concerns about the spinoff to the company in writing. Secured creditors have separately brought on Gibson Dunn & Crutcher LLP for advice in relation to the spinoff. Without a patent for Xifaxan, losses may increase for holders of Bausch’s roughly $20 billion in debt. Franklin Templeton and JPMorgan Chase & Co. number among the company’s largest creditors, and the company carries $12 billion in unsecured bonds and $7.7 billion in secured debts, company filings show.
