Valeant Pharmaceuticals International 8-K Valeant Pharmaceuticals Reports Third Quarter Financial Results

Exhibit 99.1

Contact:
Laurie W. Little
Valeant Pharmaceuticals
949-461-6002
laurie.little@valeant.com

VALEANT PHARMACEUTICALS REPORTS
THIRD QUARTER FINANCIAL RESULTS

• Revenue up 31%, 45% at constant exchange rates

• GAAP EPS $0.45, Cash EPS $0.58

• GAAP Cash Flow from Operations $52 million; Adjusted Cash Flow from Operations $65 million

• Increased guidance for 2009 is Cash EPS of $2.10 — $2.20

• Both NDA and MAA submissions for retigabine completed in October

     ALISO VIEJO, Calif., November 2, 2009 — Valeant Pharmaceuticals International (NYSE: VRX) today announced third quarter financial results for 2009.

     “Valeant continues to perform well, generating strong earnings growth in the third quarter,” stated J. Michael Pearson, chairman and chief executive officer. “All of our businesses are growing and generating positive cash flows this quarter. In particular, I would like to note our 18% organic growth rate from total product sales, at constant currency, and our $65 million of adjusted cashflow from operations.”

Revenues:

     Total revenue was $220.3 million in the third quarter of 2009 as compared to $168.4 million in the third quarter of 2008, an increase of 31%.

     Product sales in the Specialty Pharmaceuticals segment were $101.6 million in the third quarter of 2009, as compared to $70.1 million in the third quarter of 2008, an increase of 45%. At constant exchange rates, Specialty Pharmaceuticals product sales increased 47%. Within the Specialty Pharmaceuticals segment, alliance and service revenue was $25.6 million in the third quarter of 2009, which included an $8.5 million profit share related to the 1% clindamycin and 5% benzoyl peroxide product (IDP-111) that was launched by Mylan in August 2009, $5.0 million related to the Dow services business, and $3.8 million of revenue from the GlaxoSmithKline (GSK) collaboration. Because the company entered into the GSK

collaboration agreement in October 2008 and acquired Dow in December 2008, no alliance or service revenue was recorded in the third quarter of 2008.

     Product sales in Branded Generics — Latin America were $40.7 million in the third quarter of 2009 as compared to $42.6 million in the same period in 2008, a decrease of 5%. At constant exchange rates, product sales in Latin America in the third quarter of 2009 increased 19% as compared to the third quarter of 2008.

     Product sales in Branded Generics — Europe were $40.2 million in the third quarter of 2009 as compared to $40.4 million in the same period in 2008, essentially flat. At constant exchange rates, product sales in Europe in the third quarter of 2009 increased 29% as compared to the third quarter of 2008.

     Ribavirin royalties were $12.2 million in the third quarter of 2009 as compared to $15.2 million in the third quarter of 2008, a decrease of 20%. This expected decrease is entirely attributable to the expiration of royalty terms in certain European countries on the ten-year anniversary of product launches in the respective countries.

Operating Expenses/Earnings:

     The company’s cost of goods sold was 29% of product sales for the third quarter of 2009 as compared to 28% in the third quarter of 2008.

     Selling, general and administrative expenses decreased 6% in the third quarter of 2009 to $67.2 million as compared to $71.5 million in the third quarter of 2008, primarily attributable to the benefit of cost reduction activities and exchange rates, partially offset by increased costs attributable to acquisitions.

     Research and development costs decreased 51% to $11.3 million in the third quarter of 2009 as compared to $23.2 million in the same period in 2008 primarily as a result of the company’s new leveraged R&D model.

     Net interest expense increased to $12.8 million in the third quarter of 2009 as compared to $7.0 million in the third quarter of 2008, reflecting interest expense related to $365 million aggregate principal amount of senior notes issued in June 2009.

     Income from continuing operations was $37.6 million for the third quarter of 2009, or $0.45 per diluted share, as compared to a loss from continuing operations of $7.3 million, or a loss of $0.08 per diluted share, for the third quarter of 2008. On a non-GAAP Cash EPS basis, adjusted income from continuing operations was $48.8 million, or $0.58 per diluted share, in the third quarter of 2009 as compared to adjusted income from continuing operations of $16.7 million, or $0.19 per diluted share, in the third quarter of 2008.

     GAAP cashflow from operations for the third quarter of 2009 was $52 million, which includes the impact of ASC 470-20 (FSP APB 14-1) and acquisition transaction costs. Adjusted cashflow from operations for the third quarter of 2009 was $65 million.

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2009 Guidance:

     The company is updating its previous Cash EPS target and is now targeting Cash EPS between $2.10 and $2.20 in 2009, up from prior guidance of $1.90 to $2.10.

Retigabine Update:

     The company, along with its collaboration partner GSK, completed both the New Drug Application (NDA) and the Marketing Authorisation Application (MAA) submissions for retigabine on October 30, 2009.

Conference Call and Webcast Information:

     Valeant will host a conference call and a live Internet webcast along with a slide presentation today at 10:00 a.m. EST (7:00 a.m. PST) to discuss its third quarter financial results for 2009. The dial-in number to participate on this call is (877) 295-5743, confirmation code 34747409. International callers should dial (973) 200-3961, confirmation code 34747409. A replay will be available approximately two hours following the conclusion of the conference call through November 16, 2009 and can be accessed by dialing (800) 642-1687, or (706) 645-9291, confirmation code 34747409. The company will webcast the conference call live over the Internet. The webcast may be accessed through the investor relations section of Valeant’s corporate Web site at www.valeant.com.

About Valeant:

     Valeant Pharmaceuticals International (NYSE:VRX) is a multinational specialty pharmaceutical company that develops and markets a broad range of pharmaceutical products primarily in the areas of neurology and dermatology. More information about Valeant can be found at www.valeant.com.

Forward-looking Statements:

     This press release may contain forward-looking statements, including, but not limited to, statements regarding guidance with respect to expected non-GAAP cash earnings per share. 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, which factors are incorporated herein by reference. Readers are cautioned not to place undue reliance on any of these forward-looking statements.

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Valeant undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect actual outcomes.

Non-GAAP Information:

     To supplement the consolidated financial results prepared in accordance with generally accepted accounting principles (GAAP), the company uses non-GAAP financial measures that exclude certain items, such as acquisition transaction fees, special charges and credits including acquired IPR&D, restructuring, asset impairments and dispositions, amortization expense, gain on early extinguishment of debt, the new non-cash accounting charge for interest on the convertible debt related to ASC 470-20 (FSP APB 14-1), which the company adopted on January 1, 2009, and the non-GAAP tax effect of such charges. Management does not consider the excluded items part of day-to-day business or reflective of the core operational activities of the company as they result from transactions outside the ordinary course of business. 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 more 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. A reconciliation of GAAP to non-GAAP measures can be found in the table below. The company has provided guidance with respect to Cash Earnings Per Share, which is a non-GAAP financial measure that represents earnings per share, excluding certain items, such as acquisition transaction fees included within SG&A, special charges and credits including acquired IPR&D, restructuring, asset impairments and dispositions, amortization expense, gain on early extinguishment of debt, the new non-cash accounting charge for interest on the company’s convertible debt related to ASC 470-20 (FSP APB 14-1) and the tax effect of such charges. The company has not provided a reconciliation of these forward-looking non-GAAP financial measures due to the difficulty in forecasting and quantifying the exact amount of the items excluded from the non-GAAP financial measures that will be included in the comparable GAAP financial measures.

Financial Tables, including a reconciliation of GAAP to non-GAAP financial measures, follow.

###

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Table 1

Valeant Pharmaceuticals International
Statement of Income
For the Three and Nine Months Ended September 30, 2009 and 2008

	Three Months Ended									Nine Months Ended
	September 30,									September 30,
(In thousands, except per share data)	2009			2008			% Change			2009			2008			% Change
Product sales	$	182,529		$	153,181			19	%	$	502,227		$	431,142			16	%
Service revenue		5,035			—			NM			17,379			—			NM
Alliance revenue (a)		32,754			15,243			115	%		70,333			42,821			64	%
Total revenues		220,318			168,424			31	%		589,939			473,963			24	%
Cost of goods sold		52,295			42,698			22	%		134,742			126,327			7	%
Cost of services		4,047			—			NM			13,710			—			NM
Selling, general and administrative (“SG&A”)		67,230			71,458			-6	%		193,981			211,669			-8	%
Research and development costs, net		11,296			23,239			-51	%		29,176			75,100			-61	%
Special charges and credits including acquired in-process research and development (b)		—			—			NM			1,974			—			NM
Restructuring, asset impairments and dispositions		307			3,527			NM			3,212			4,294			NM
Amortization expense		17,616			11,488			53	%		51,725			37,616			38	%
		152,791			152,410			0	%		428,520			455,006			-6	%
Income from operations		67,527			16,014						161,419			18,957
Interest expense, net		(12,843	)		(6,987	)					(26,847	)		(23,736	)
Gain (loss) on early extinguishment of debt		(155	)		(14,882	)					7,221			(14,882	)
Other expense, net including translation and exchange		(1,350	)		(1,556	)					(786	)		(3,389	)
Income (loss) from continuing operations before income taxes		53,179			(7,411	)					141,007			(23,050	)
Provision (benefit) for income taxes		15,545			(148	)					39,541			33,726
Income (loss) from continuing operations		37,634			(7,263	)					101,466			(56,776	)
Income (loss) from discontinued operations, net		(354	)		210,154						(131	)		187,134
Net income	$	37,280		$	202,891					$	101,335		$	130,358
Earnings per share:
Basic:
Income (loss) from continuing operations	$	0.46		$	(0.08	)				$	1.23		$	(0.64	)
Discontinued operations		—			2.39						—			2.10
Basic earnings per share	$	0.46		$	2.31					$	1.23		$	1.46
Shares used in per share computation		81,907			87,988						82,407			89,123
Diluted:
Income (loss) from continuing operations	$	0.45		$	(0.08	)				$	1.21		$	(0.64	)
Discontinued operations		(0.01	)		2.39						—			2.10
Diluted earnings per share	$	0.44		$	2.31					$	1.21		$	1.46
Shares used in per share computation		83,869			87,988						84,040			89,123

(a)	See Table 3.
(b)	Special charges and credits including acquired in-process research and development for the nine months ended September 30, 2009 relates primarily to the acquisition of product rights to market Opana in Canada, Australia and New Zealand.

Table 2

Valeant Pharmaceuticals International
Reconciliation of GAAP EPS to Cash EPS
For the Three and Nine Months Ended September 30, 2009 and 2008

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(In thousands, except per share data)	2009			2008			2009			2008
Income (loss) from continuing operations	$	37,634		$	(7,263	)	$	101,466		$	(56,776	)
Non-GAAP adjustments(a):
Acquisition transaction fees		2,832			—			3,741			—
Special charges and credits including acquired in-process research and development		—			—			1,974			—
Restructuring, asset impairments and dispositions		307			3,527			3,212			4,294
Amortization expense		17,616			11,488			51,725			37,616
		20,755			15,015			60,652			41,910
ASC 470-20 (FSP APB 14-1) interest		2,176			3,797			8,350			11,176
(Gain) loss on early extinguishment of debt		155			14,882			(7,221	)		14,882
Tax		(11,911	)		(9,715	)		(33,463	)		17,376
Total adjustments		11,175			23,979			28,318			85,344
Adjusted income from continuing operations	$	48,809		$	16,716		$	129,784		$	28,568
GAAP earnings (loss) per share — diluted	$	0.45		$	(0.08	)	$	1.21		$	(0.64	)
Cash earnings per share — diluted	$	0.58		$	0.19		$	1.54		$	0.32
Shares used in diluted per share calculation — GAAP earnings (loss) per share		83,869			87,988			84,040			89,123
				��
Shares used in adjusted diluted per share calculation — Cash earnings per share		83,869			89,788			84,040			90,321

(a)

To supplement the financial measures prepared in accordance with generally accepted accounting principles (GAAP), the company uses non-GAAP financial measures notably cash earnings per share, organic growth and adjusted cash flow from operations that exclude certain items, such as acquisition transaction fees, special charges and credits including acquired in-process research and development, restructuring, asset impairments and dispositions, amortization expense, ASC 470-20 (FSP APB 14-1) interest, gain (loss) on early extinguishment of debt, the non-GAAP tax effect of such charges, fluctuations in exchange rates and product sales from recent acquisitions. 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 more 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 measure

This table includes Cash Earnings Per Share, which is a non-GAAP financial measure that represents earnings per share, excluding acquisition transaction fees included within SG&A, special charges and credits including acquired in-process research and development, restructuring, asset impairments and dispositions, amortization expense, ASC 470-20 (FSP APB 14-1) interest, gain on early extinguishment of debt and the non-GAAP tax effect of such charges.

Table 3

Valeant Pharmaceuticals International
Statement of Revenue — by Segment
For the Three and Nine Months Ended September 30, 2009 and 2008
(In thousands)

3.1 Revenue

	Three Months Ended							Nine Months Ended
	September 30,							September 30,
					%							%
	2009		2008		Change			2009		2008		Change
Specialty pharmaceuticals
U.S.
Dermatology (a)	$	27,194	$	17,116		59	%	$	87,648	$	60,109		46	%
Neurology & Other		48,162		31,421		53	%		126,014		87,787		44	%
Total U.S. (a)		75,356		48,537		55	%		213,662		147,896		44	%
Canada		15,831		15,203		4	%		46,150		42,827		8	%
Australia (a)		10,429		6,384		63	%		24,750		18,044		37	%
		101,616		70,124		45	%		284,562		208,767		36	%
Divested business		—		—		NM			—		5,784		NM
Specialty pharmaceuticals product sales		101,616		70,124		45	%		284,562		214,551		33	%
Alliance		20,594		—		NM			32,351		—		—
Service		5,035		—		NM			17,379		—
Total specialty pharmaceuticals revenue		127,245		70,124		81	%		334,292		214,551		56	%
Branded generics — Latin America product sales		40,679		42,627		-5	%		108,061		99,708		8	%
Branded generics — Europe product sales(a)		40,234		40,430		0	%		109,604		116,883		-6	%
Alliances (ribavirin royalties only)		12,160		15,243		-20	%		37,982		42,821		-11	%
Total revenue	$	220,318	$	168,424		31	%	$	589,939	$	473,963		24	%
Total product sales included above	$	182,529	$	153,181		19	%	$	502,227	$	431,142		16	%

3.2 Currency impact and revenue excluding currency impact(b)(c)

	Three Months Ended									Nine Months Ended
	September 30,									September 30,
			2009									2009
	2009		excluding							2009		excluding
	currency		currency				%			currency		currency				%
	impact		impact		2008		Change			impact		impact		2008		Change
Specialty pharmaceuticals
U.S.	$	—	$	75,356	$	48,537		55	%	$	—	$	213,662	$	147,896		44	%
Canada		1,012		16,843		15,203		11	%		6,880		53,030		42,827		24	%
Australia		717		11,146		6,384		75	%		4,766		29,516		18,044		64	%
		1,729		103,345		70,124		47	%		11,646		296,208		208,767		42	%
Divested business		—		—		—		NM			—		—		5,784		NM
Specialty pharmaceuticals product sales		1,729		103,345		70,124					11,646		296,208		214,551
Alliance		—		20,594		—					—		32,351		—
Service		98		5,133		—					635		18,014		—
Total specialty pharmaceuticals revenue		1,827		129,072		70,124		84	%		12,281		346,573		214,551		62	%
Branded generics — Latin America product sales		10,062		50,741		42,627		19	%		29,468		137,529		99,708		38	%
Branded generics — Europe product sales		12,076		52,310		40,430		29	%		41,037		150,641		116,883		29	%
Alliances (ribavirin royalties only)		—		12,160		15,243		-20	%		—		37,982		42,821		-11	%
Total revenue	$	23,965	$	244,283	$	168,424		45	%	$	82,786	$	672,725	$	473,963		42	%
Total product sales included above	$	23,867	$	206,396	$	153,181		35	%	$	82,151	$	584,378	$	431,142		36	%

3.3 Alliance Revenue

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
	Segment	2009		2008		2009		2008
Ribavirin royalty	Alliances	$	12,160	$	15,243	$	37,982	$	42,821
1% clindamycin and 5% benzoyl peroxide (IDP111) profit share	Specialty		8,535		—		8,535		—
Other royalties	Specialty		2,281		—		7,920		—
License payments	Specialty		6,000		—		6,000		—
GSK collaboration	Specialty		3,778		—		9,896		—
Total alliance revenue		$	32,754	$	15,243	$	70,333	$	42,821

(a)	Product sales in the U.S., Australia, Branded generics — Latin America and Branded generics — Europe in the three months ended September 30, 2009 include the sales of products acquired in the fourth quarter of 2008 from Coria in the U.S. and DermaTech in Australia, products acquired in the second quarter 2009 from Emo-Farm in Branded generics — Europe and in Australia and products acquired in the third quarter 2009 from Tecnofarma S.A de C.V. in Branded generics — Latin America of $10.8 million, $3.0 million, $3.0 million, $1.8 million and $4.7 million, and $30.0 million, $6.7 million, $5.3 million, $2.3 million and $4.7 million in the nine months ended September 30, 2009, respectively.
(b)	Note: Currency effect for constant currency sales is determined by comparing 2009 reported amounts adjusted to exclude currency impact, calculated using 2008 monthly average exchange rates, to the actual 2008 reported amounts. Constant currency sales is not a GAAP-defined measure of revenue growth. Constant currency sales as defined and presented by us may not be comparable to similar measures reported by other companies.
(c)	See footnote (a) to Table 2.

Table 4

Valeant Pharmaceuticals International
Statement of Cost of Goods Sold and Non-GAAP Operating Income — by Segment
For the Three and Nine Months Ended September 30, 2009 and 2008

(In thousands)

4.1 Cost of goods sold

	Three Months Ended											Nine Months Ended
	September 30,											September 30,
			% of						% of					% of						% of
			product						product					product						product
	2009		sales			2008			sales			2009		sales			2008			sales
Specialty pharmaceuticals	$	22,246		22	%	$	15,918			23	%	$	55,790		20	%	$	45,585			21	%
Branded generics — Latin America		13,141		32	%		13,600			32	%		30,637		28	%		37,145			37	%
Branded generics — Europe		16,852		42	%		13,191			33	%		48,253		44	%		44,489			38	%
Corporate		56					(11	)					62					(892	)
	$	52,295		29	%	$	42,698			28	%	$	134,742		27	%	$	126,327			29	%

4.2 Non-GAAP operating income excluding currency impact(a)(b)

	Three Months Ended
	September 30,
									2009
							2009		excluding
				% of			currency		currency			% of						% of
	2009			revenue			impact		impact			revenue			2008			revenue
Specialty pharmaceuticals	$	64,449			51	%	$	680	$	65,129			50	%	$	5,043			7	%
Branded generics — Latin America		13,078			32	%		3,118		16,196			32	%		11,171			26	%
Branded generics — Europe		12,009			30	%		3,616		15,625			30	%		16,005			40	%
		89,536			43	%		7,414		96,950			42	%		32,219			21	%
Alliances & Corporate		(1,254	)					—		(1,254	)					(1,189	)
	$	88,282			40	%	$	7,414	$	95,696			39	%	$	31,030			18	%
	Nine Months Ended
	September 30,
									2009
							2009		excluding
				% of			currency		currency			% of						% of
	2009			revenue			impact		impact			revenue			2008			revenue
Specialty pharmaceuticals	$	158,533			47	%	$	4,616	$	163,149			47	%	$	9,532			4	%
Branded generics — Latin America		40,692			38	%		11,384		52,076			38	%		16,047			16	%
Branded generics — Europe		29,303			27	%		10,137		39,440			26	%		35,779			31	%
		228,528			41	%		26,137		254,665			40	%		61,358			14	%
Alliances & Corporate		(6,457	)					—		(6,457	)					(490	)
	$	222,071			38	%	$	26,137	$	248,208			37	%	$	60,868			13	%

(a)

See footnote (a) to Table 2 and footnote (b) to Table 3.

(b)

Non-GAAP operating income of $88.3 million and $222.1 million for the three and nine months ended September 30, 2009 excludes the following GAAP items from GAAP operating income of $67.5 million and $161.4 million: acquisition transaction fees included within SG&A of $2.8 million and $3.8 million, special charges and credits including acquired in-process research and development of $0 and $2.0 million, restructuring, asset impairments and dispositions of $0.2 million and $3.2 million and amortization expense of $17.6 million and $51.7 million, respectively. Non-GAAP operating income of $31.0 million and $60.9 million for the three and nine months ended September 30, 2008 excludes the following GAAP items from GAAP operating income of $16.0 million and $19.0 million: restructuring, asset impairments and dispositions of $3.5 million and $4.3 million and amortization expense of $11.5 million and $37.6 million, respectively.

Table 5

Valeant Pharmaceuticals International
Consolidated Balance Sheet and Other Data
(In thousands)

5.1 Cash

	As of		As of
	September 30,		December 31,
	2009		2008
Cash and cash equivalents	$	261,559	$	199,582
Marketable securities		124,350		19,193
Total cash and marketable securities	$	385,909	$	218,775

5.2 Summary of Cash Flow Statement

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
Cash flow provided by (used in):
Operating activities, continuing operations (GAAP)	$	51,580		$	2,589		$	133,863		$	58,646
Effect of ASC 470-20 (FSP APB 14-1) (a)(b)		12,351			—			35,338			—
Acquisition transaction fees (a)(b)		861			—			1,727			—
Operating activities, continuing operations (Non-GAAP) (a)(b)		64,792			2,589			170,928			58,646
Operating activities, discontinued operations		(426	)		13,986			(2,860	)		9,632
Investing activities (GAAP) (c)		(48,157	)		424,567			(235,751	)		512,284
Acquisition transaction fees (a)(b)		(861	)		—			(1,727	)		—
Investing activities (Non-GAAP) (a)(b)(c)		(49,018	)		424,567			(237,478	)		512,284
Financing activities (GAAP) (c)		(90,401	)		(374,017	)		171,374			(373,463	)
Effect of ASC 470-20 (FSP APB 14-1) (a)(b)		(12,351	)		—			(35,338	)		—
Financing activities (Non-GAAP) (a)(b)(c)		(102,752	)		(374,017	)		136,036			(373,463	)
Effect of exchange rate changes on cash and cash equivalents (c)		3,343			(12,162	)		(4,649	)		4,799
Net increase (decrease) in cash and cash equivalents (c)		(84,061	)		54,963			61,977			211,898
Net increase (decrease) in marketable securities (c)		16,991			(33,935	)		105,157			(2,373	)
Net increase (decrease) in cash and marketable securities (c)	$	(67,070	)	$	21,028		$	167,134		$	209,525

(a)	See footnote (a) to Table 2.
(b)	Cash flow for the three and nine months ended September 30, 2009 includes $12.4 million and $35.3 million relating to payments of accreted interest on long-term debt and notes payable made during these periods as determined by and pursuant to ASC 470-20 (FSP APB 14-1), $0 million and $9.0 million for acquisition transaction fees related to the purchase of Emo-Farm in Poland, $0.7 million and $0.7 million for acquisition fees related to the purchase of Tecnofarma in Mexico and $0.2 million and $0.2 million for acquisition fees related to the purchase of PFI in Australia, respectively.
(c)	Includes results from discontinued operations.

5.3 GSK Collaboration — Retagibine

	Three Months Ended
	September 30,
Valeant SG&A	$	9
Valeant R&D		7,456
		7,465
GSK incurred cost		10,019
	$	17,484
Equalization (difference between individual partner costs and 50% of total)	$	(1,277	)

	Three Months Ended September 30, 2009
				Alliance
	Balance sheet			revenue			SG&A			R&D
Accounting impact
Upfront payment from GSK	$	125,000		$	—		$	—		$	—
Release from upfront payment in prior quarters		(30,481	)		—			—			—
Incurred cost in current quarter		—			—			9			7,456
Release from upfront payment in current quarter		(12,520	)		(3,778	)		(358	)		(8,384	)
Remaining upfront payment from GSK	$	81,999			—			—			—
Equalization payable to GSK	$	(1,277	)		—			349			928
				$	(3,778	)	$	—		$	—

Valeant Pharmaceuticals International
Reconciliation of Product Sales Excluding Acquisitions and Currency Impact
For the Three Months Ended September 30, 2009 and 2008
(In thousands) Supplemental Table

			Three Months Ended							Three Months Ended
	September 30, 2009									September 30, 2008
												Q3 2009
								2009				growth at
			2009					excluding				constant
			acquisition			2009		currency &				currency, net
	2009		impact at			currency		acquisition				of
	as reported		2009 rates			impact		impact		2008 as reported		acquisitions
Specialty pharmaceuticals
U.S.	$	75,356	$	(10,756	)	$	—	$	64,600	$	48,537		33	%
Canada		15,831		—			1,012		16,843		15,203		11	%
Australia		10,429		(4,857	)		446		6,018		6,384		-6	%
Specialty pharmaceuticals product sales		101,616		(15,613	)		1,458		87,461		70,124		25	%
Branded generics — Latin America product sales		40,679		(4,673	)		8,786		44,792		42,627		5	%
Branded generics — Europe product sales		40,234		(3,038	)		11,050		48,246		40,430		19	%
Total product sales	$	182,529	$	(23,324	)	$	21,294	$	180,499	$	153,181		18	%

See footnote (a) to Table 2.