Page 560 - The Case Lab Book

Luck! Shkreli certainly does have his share of it! He and Elea

Capital Management benefited from Lehman falling in the

financial crash of 2008 thereby avoiding paying $2.3m. Even

if the action had gone ahead it is still questionable whether

he would or could have paid or filed for bankruptcy.

In late 2012, Shkreli took Retrophin public through a “reverse

merger,” This entailed merging into an existing publicly

traded shell company. Costs of attaining a public quotation

are avoided but access to the investing public is obtained.

Such deals are so notoriously sleazy that the S.E.C. has

issued a bulletin warning investors to stay away from them.

Syprine, which, he tells me, had about $200,000 in sales per

month in the fall of 2012, but now has sales of $10 million a

month, an increase that is due purely to price increases by

Valeant. Cuprimine is a similar story. In other words, Valeant

did exactly what Shkreli was hoping to do.

Introduction

1: Shkreli’s actions are the main focus of the case study.

Shkreli’s actions of acquiring pharmaceutical companies

and the means by which he did this provide the context

of the discussion. Raising the price of Daraprim by over