I-Team 10: Local lawmakers send letter to Valeant CEO

Posted at: 07/31/2013 6:30 PM
By: Brett Davidsen

A battle to save hundreds of jobs in Rochester is brewing.  Lawmakers say they're fighting for dozens of local Bausch and Lomb workers. On Wednesday, they sent a strong message to the future owners, urging them to rethink their plans of massive layoffs.

Bitter, anger and regret. That's what lawmakers say will happen if Bausch and Lomb carries out its plan. So far, there's not word on the exact number, but we're told it will be in the hundreds. The company wants to move its headquarters from Rochester to New Jersey. Wednesday afternoon, lawmakers across the state came together and sent a letter to the CEO of Valeant, which is the soon-to-be new owner of the eye care company.

Many of these politicians and their staffs had been working behind the scenes and talking with Valeant in hopes of lessening the impact to Bausch and Lomb employees in Rochester.  But apparently, our elected officials were caught off guard by a Monday memo from Valeant CEO J. Michael Pearson to employees laying out Valeant's plans once the deal is completed.

On Wednesday, in response to that memo, these powerful politicians fired off a letter to Pearson expressing their outrage. That letter is from Senators Schumer and Gillibrand, Governor Cuomo and Congresswoman Louise Slaughter and Congressman Dan Maffei as well as Monroe County Executive Maggie Brooks and Rochester Mayor Tom Richards.

Valeant, this week, stated that it expects to cut 10 to 15 percent of its workforce across the newly combined company. It hasn't said how many layoffs that will mean here. But as I-Team 10 has been reporting Greater Rochester Enterprise is preparing for as many as 1,000 local layoffs. Valeant also plans to move the B&L headquarters to New Jersey, something our lawmakers were clearly unaware of.

In their letter to Pearson, the politicians write, “We are firmly of the view that Valeant will come to regret the decision to move any significant number of jobs from Rochester, B&L's home for 160 years. The workforce in Rochester is highly dedicated, highly-educated and loyal. Unfortunately, it appears that their loyalty will not be rewarded in kind by Valeant. Headquarters functions are being eliminated or moved without the workers even being given a chance."

A Valeant spokesperson responded late Wednesday afternoon saying, they appreciated the views of the politicians, but that B&L's contact lens operations have been underperforming for a decade and are in need of a turn around.

The letter is unlikely to change Valeant's plans. It is expected to get its regulatory approvals and close the deal to buy B&L as early as next week.

Valeant's full statement

“We appreciate the views of these officials and have been in
communication with them multiple times during the course of the last few
weeks. While Bausch + Lomb is a great company, the contact lens
operations, which makes up the vast majority of the non-corporate based
jobs in Rochester, has been underperforming for a decade and in need of
a turnaround. We are enthusiastic about the challenge ahead.  Though
some decisions are left to be made, we are pleased that manufacturing
and R& D will remain open in Rochester and future growth will be
dependent upon future performance. We are committed as a company to
continued growth for our employees and our shareholders.”

Copy of the lawmakers' letter to Valeant CEO Michael Pearson appears below:

Mr. Pearson,

We write to express our grave concerns about the potential impact on the Rochester community of your company's pending acquisition of Bausch + Lomb, a bedrock employer and corporate citizen in the Rochester area for 160 years. Valeant’s preliminary plans for the integration of Valeant and Bausch + Lomb, as well as Valeant's history as a serial acquirer, cause us to question your commitment to the company and the community.

On Sunday, Valeant sent a memo to Bausch + Lomb employees, laying out Valeant’s philosophy and strategy, and preliminary plans for the integration of Valeant and B+L, indicating that “integration planning [is] largely finished.” The memo states that you “are planning to eliminate the global structure and to reduce significantly the regional structure currently in place at Bausch + Lomb,” and that you “will operate [your] U.S. headquarters and new U.S. Eye Health business unit in New Jersey.” While the memo did not contain detailed information regarding the impact of these decisions on the Rochester workforce (beyond the new senior management team), we can only conclude that the impact of this reorganization will be seriously harm B+L’s Rochester workforce and operations.

We are firmly of the view that Valeant will come to regret the decision to move any significant number of jobs from Rochester, B+L’s home for 160 years. The workforce in Rochester is highly-dedicated, highly-educated, and loyal. Unfortunately, it appears that their loyalty will not be rewarded in kind by Valeant – headquarters functions are being eliminated or moved without the workers even being given a chance.

This is a body blow that the Rochester community will eventually recover from, but will not forget. We believe it is of utmost importance to the future of the Valeant/B+L relationship with Rochester that you provide concrete assurances regarding the other B+L operations in Rochester, namely manufacturing and research and development.

With respect to manufacturing, the memo says you “will continue to operate all current manufacturing locations in the U.S., including Rochester,” and you have made similar assurances in private conversations with several of us. But you have thus far made no commitment that these operations will remain in Rochester for the long term, and will not be replaced or phased out as new products come on line. Please respond by describing in detail your medium- and longer-term plans for manufacturing in Rochester. In particular, can you commit that, barring unforeseen circumstances, all manufacturing lines currently operating in Rochester will remain in operation? And what assurances can you provide that eye care products that have been developed in Rochester and are now in the pipeline, such as the Next Generation SiHy(Silicone Hydrogel) Monthly Contact Lens and the Biotrue ONEday Multifocal Contact Lens, will ultimately, if production is scaled up and approvals are secured, be manufactured at commercial scale in Rochester?

We also have significant concerns about the future of R&D in Rochester. You are on the record as stating that R&D “is not a good use of shareholder money,” and the memo to employees states that “R&D investment has not provided a good return for most pharmaceutical companies over the last two decades.” The memo further states your “primary source of innovation will continue to come from business development” – i.e., acquisitions – and you intend to make only “selective late stage R&D investments.” This is a concern not only with respect to your continued support of local R&D functions, but also for the long-term success of a company in an industry built on the creation of new life-enhancing products.