Stock Report | June 3, 2013 | NYS Symbol: VRX | VRX is in the S&P ADR Index

Valeant Pharmaceuticals International Inc

S&P Recommendation BUY GICS Sector Health Care Sub-Industry Pharmaceuticals

55555

Price $88.21 (as of Jun 3, 2013)

12-Mo. Target Price $102.00

Summary This specialty drugmaker, formerly Biovail Corp., was created through the September 2010 merger of Valeant Pharmaceuticals and Biovail. In May 2013, VRX agreed to acquire Bausch & Lomb for $8.7 billion.

Key Stock Statistics (Source S&P, Vickers, company reports) 52-Wk Range $96.25 42.47 Trailing 12-Month EPS $-0.43 Trailing 12-Month P/E NM $10K Invested 5 Yrs Ago $93,705 Price Performance
30-Week Mov. Avg. 12-Mo. Target Price
100 80 60 40

S&P Oper. EPS 2013 E S&P Oper. EPS 2014 E P/E on S&P Oper. EPS 2013 E Common Shares Outstg. (M)

5.63 6.50 15.7 305.9

Market Capitalization(B) Yield (%) Dividend Rate/Share Institutional Ownership (%)

$26.980 Nil Nil 83

Beta S&P 3-Yr. Proj. EPS CAGR(%) S&P Credit Rating

0.81 15 NR

Qualitative Risk Assessment

10-Week Mov. Avg. Relative Strength GAAP Earnings vs. Previous Year Up Down No Change Volume Above Avg. Below Avg. STARS

LOW

MEDIUM

HIGH

20

Our risk assessment primarily reflects risks associated with the challenges of integrating acquisitions, achieving planned synergies and growing the overall business. Along with other branded pharmaceutical companies, VRX also faces R&D risks associated with the development, regulatory approval and commercialization of pipeline products.
76

Vol. Mil. 15 10 5 0 5 1 J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A 4 3 38

Quantitative Evaluations S&P Quality Ranking

5

BB B+ AA A+ STRONG 95
HIGHEST = 99

D
4

B-

Relative Strength Rank

LOWEST = 1

2010

2011

2012

2013
Options: ASE, CBOE, P, Ph

Analysis prepared by Equity Analyst Herman Saftlas on Jun 03, 2013, when the stock traded at $89.26. Highlights

Revenue/Earnings Data Revenue (Million U.S. $) 1Q 2Q 2013 1,068 -2012 856.1 820.1 2011 565.0 609.4 2010 219.6 238.8 2009 173.3 193.5 2008 208.5 186.1

Investment Rationale/Risk

We project revenues of $4.9 billion in 2013, up from 2012's $3.5 billion, primarily reflecting the late 2012 acquisition of Medicis Pharmaceutical. We expect Medicis to significantly expand VRX's higher margin dermatological pharmaceuticals business, which was boosted by the earlier acquisitions of Dermik and Ortho Dermatologics. Key Medicis franchises comprise Solodyn oral anti-acne therapy and Restylane dermal filler. We forecast solid sales growth for ophthalmological products, with more modest gains seen for U.S. neurology drugs. We project continued above-average sales growth in emerging markets. We forecast notable expansion in adjusted gross margins in 2013, from 2012's 74%, helped by projected higher volume, a more profitable sales mix, and acquisition-related synergies. However, we expect R&D costs and interest expense to increase sharply, with the latter reflecting merger-related financing. After a projected adjusted tax rate of about 4.4%, versus 3.0% in 2012, we estimate cash EPS of $5.63 for 2013 and $6.50 for 2014. Cash EPS was $4.88 in 2012.

In late May 2013, VRX agreed to acquire privately held Bausch & Lomb (B&L) for $8.7 billion, of which $4.5 billion will go to an investor group, and $4.2 billion will be used to repay B&L debt. We believe this is a highly attractive deal, moving VRX to leadership in the rapidly growing ophthalmology space, in addition to its existing dominance in dermatology. The deal is expected to yield at least $800 million in annual cost savings by the end of 2014. VRX noted that if the transaction had occurred at the start of 2013, the deal would have been 40% accretive to 2013 EPS on a pro forma basis. Risks to our opinion and target price include R&D pipeline setbacks, and failure to successfully integrate acquisitions. Another risk is VRX's highly leveraged balance sheet, with debt currently near 3.8X EBITDA. Our 12-month target price of $102 applies a premium to peers P/E of 15.7X to our 2014 EPS estimate, which we believe is warranted by VRX's above average growth prospects. Our discounted cash flow model, which assumes a WACC of 10.2% and terminal growth of 1%, also indicates intrinsic value near $102.

3Q -884.1 600.6 208.3 212.5 181.1

4Q -986.3 688.5 514.6 241.1 181.5

Year -3,547 2,463 1,181 820.4 757.2

Earnings Per Share (U.S. $) 2013 -0.09 E1.25 E1.48 2012 -0.04 -0.07 0.02 2011 0.02 0.17 0.13 2010 -0.02 0.21 -1.27 2009 0.25 0.15 0.25 2008 0.35 -0.16 0.31

E1.64 -0.29 0.18 -0.10 0.46 0.76

E5.63 -0.38 0.49 -1.06 1.11 1.25

Fiscal year ended Dec. 31. Next earnings report expected: Early August. EPS Estimates based on S&P Operating Earnings; historical GAAP earnings are as reported.

Dividend Data No dividends have been paid since the Valeant-Biovail merger in September 2010.

Please read the Required Disclosures and Analyst Certification on the last page of this report.

Stock Report | June 3, 2013 | NYS Symbol: VRX

Valeant Pharmaceuticals International Inc

Business Summary June 03, 2013 CORPORATE OVERVIEW. This specialty pharmaceutical company, formerly Biovail Corp., assumed its present form after the merger of Biovail and Valeant Pharmaceuticals on September 28, 2010. The company currently operates through four business platforms: U.S. dermatology (33% of 2012 sales); U.S. neurology and other (22%); Canada and Australia (15%); and emerging markets (30%). The company has what we view as a strong record of developing drugs that incorporate advanced oral controlled-release delivery technologies. These drugs generally offer advantages over conventional products in terms of dosing convenience and cost. Branded and generic drugs are manufactured and sold either directly by VRX or by others under licensing arrangements. In total, VRX markets about 1,100 pharmaceutical products globally. Valeant's neurological products include Wellbutrin XL (about 4% of 2012 revenues), a once-daily, extended-release version of GlaxoSmithKline's popular Wellbutrin antidepressant. Besides marketing Wellbutrin XL in the U.S., VRX also manufactures and supplies this product for sales by GlaxoSmithKline, with VRX booking a percentage of Wellbutrin XL sales. Sales of off-patent Wellbutrin XL have been in a declining trend in recent quarters. A once-a-day formulation of Wellbutrin XL is also sold under the Aplenzin name. Other neurological products include Ultram ER, a once-daily form of tramadol pain treatment; Diastat AcuDial gel for the treatment of epilepsy; Migranal to treat migraine headaches; Tasmar and Zelapar for Parkinson's disease; and Xenazine to treat shaking symptoms associated with Huntington's disease. Xenazine was acquired from Prestwick Pharmaceuticals for some $100 million in September 2008. Zovirax (7% of revenues) is a topical cream line for the treatment of herpes. VRX markets Zovirax in the U.S. and Canada, and also supplies Zovirax to GlaxoSmithKline under a supply agreement. Sales of Zovirax are expected to drop sharply in 2013, impacted by generic competition. Other dermatologicals include Efudex/Efudix for solar keratoses and superficial basal cell carcinoma; Acanya and Atralin gels for acne; and the CereVe line of OTC moisturizing products. Through its Canadian unit, VRX markets in Canada Tiazac cardiovascular, Cesamet for nausea associated with chemotherapy, and OTC products. In Australia, the company markets OTC dermatologicals, and OTC treatments for coughs, colds and allergies. Branded generics in Europe, sold primarily in Poland, Hungary, the Czech Republic and Slovakia, comprise treatments for infections, cardiovascular disease, diabetes and other conditions. Branded generics in Latin America comprise antibacterials, dermatologicals, vitamins and other OTC products. IMPACT OF MAJOR DEVELOPMENTS. We view the late September 2010 merger of Valeant and Biovail as a watershed event for both firms, enabling them to create a new combined platform for sales and earnings growth via an expanded and focused product portfolio, and projected significant operating economies and synergies. In December 2012, VRX acquired Medicis Pharmaceutical Corp. for $2.6 billion. A leading maker of anti-acne pharmaceuticals, dermal fillers and other dermatological products, Medicis earned about $160 million on sales of $721 million in 2011. In April 2013, VRX acquired Obagi, a maker of skin care products, for about $440 million in cash. In late May 2013, VRX agreed to acquire privately held Bausch & Lomb (B&L) for $8.7 billion in cash and stock, which would be the largest deal in Valeant's history. A maker of ophthalmic drugs, contact lenses and solutions, and ophthalmic surgical instruments, B&L is expected to earn adjusted EBITDA of about $720 million on projected sales of some $3.3 billion in 2013. VRX expects the deal to generate at least $800 million in annual cost cost savings by the end of 2014. Acquisitions made during 2011 included PharmaSwiss S.A., a branded generics and OTC drug company based in Zug, Switzerland, for about $480 million in cash in February; AB Sanitas, a pharmaceuticals firm based in Kaunas, Lithuania, for $513 million in cash and debt assumption in May; Dermik, a skin care business acquired from Sanofi for $425 million in July; Ortho Dematologics, bought from Johnson & Johnson for $345 million in July; and iNova, drugmaker based in Australia, for $623 million in December. We also see potential in Valeant's new R&D pipeline, which comprises some six products in the areas of dermatology (four compounds), specialty central nervous system therapeutics (one), and ophthalmology (one). In June 2011, the FDA approved Potiga, a novel epilepsy drug that VRX in-licensed from Alexza Pharmaceuticals. FINANCIAL TRENDS. VRX targets a 20% plus internal rate of return using statutory tax rates from its acquisitions. In November 2012, Valeant noted that over 90% of the deals made since 2008 were ahead of its deal model from a cash generation standpoint. In early May 2013, VRX raised its 2013 cash EPS forecast to $5.55-$5.85, from $5.45-$5.75, despite the impact of generic erosion in the Zovirax line. The company reaffirmed 2013 revenue guidance of between $4.4 billion and $4.8 billion, and projected cash flow from operations of $1.5 billion to $1.75 billion. At the end of March 2013, VRX had total debt of $10.6 billion, and cash of $414 million. Corporate Information Investor Contact L.W. Little (949-461-6002) Office 2150 St. Elzear boulevard West, Laval, QC, Canada H7L 4A8. Telephone 514-744-6792. Fax 514-744-6272. Email ir@valeant.com Website http://www.valeant.com

Officers Chrmn & CEO J.M. Pearson EVP, CFO & Chief Acctg Officer H.B. Schiller Chief Admin Officer B.M. Stolz CSO R.F. Butz CTO J. Sebben

Board Members R. H. Farmer T. Melas-Kyriazi J. M. Pearson N. A. Provencio L. M. Segal

R. A. Ingram G. M. Morfit R. N. Power H. B. Schiller K. B. Stevenson

Domicile Quebec Founded 1983 Employees 7,000 Stockholders 2,486

Stock Report | June 3, 2013 | NYS Symbol: VRX

Valeant Pharmaceuticals International Inc

Quantitative Evaluations S&P Fair Value Rank
NR 1
LOWEST

Expanded Ratio Analysis

2 3 4 5
HIGHEST

Based on S&P's proprietary quantitative model, stocks are ranked from most overvalued (1) to most undervalued (5).

Fair Value Calculation Investability Quotient Percentile Volatility Technical Evaluation Insider Activity

NA

Price/Sales Price/EBITDA Price/Pretax Income P/E Ratio Avg. Diluted Shares Outstg (M)
Figures based on calendar year-end price

2011 6.18 13.20 NM 95.43 326.1

2010 4.69 11.90 NM NM 195.8

2009 2.70 6.13 12.64 12.57 158.5

2008 1.99 4.62 11.89 7.55 159.7

24
LOWEST = 1 HIGHEST = 100

Key Growth Rates and Averages Past Growth Rate (%) Sales Net Income Ratio Analysis (Annual Avg.) Net Margin (%) % LT Debt to Capitalization Return on Equity (%)
1 Year 3 Years 5 Years 9 Years

VRX scored lower than 76% of all companies for which an S&P Report is available.

NM NM

47.77 NM

16.22 -96.38

7.23 -3.78

LOW BULLISH

AVERAGE

HIGH

Since December, 2012, the technical indicators for VRX have been BULLISH.

6.48 55.94 3.60

3.44 36.72 3.58

11.99 22.03 8.36

13.22 25.13 10.32

UNFAVORABLE

NEUTRAL

FAVORABLE

Company Financials Fiscal Year Ended Dec. 31 Per Share Data (U.S. $) Tangible Book Value Cash Flow Earnings Dividends Payout Ratio Prices:High Prices:Low P/E Ratio:High P/E Ratio:Low Income Statement Analysis (Million U.S. $) Revenue Operating Income Depreciation Interest Expense Pretax Income Effective Tax Rate Net Income 2012 NA NA -0.38 NA Nil 61.11 42.47 NM NM 2011 NM 2.37 0.49 Nil Nil 57.24 28.06 NM NM 2010 NM -0.24 -1.06 1.28 NM 30.80 13.64 NM NM 2009 NM 2.05 1.11 0.64 58% 15.50 9.26 14 8 2008 2.41 1.79 1.25 1.50 120% 14.90 6.65 12 5 2007 3.52 1.74 1.22 2.00 164% 26.48 13.20 22 11 2006 3.04 1.95 1.30 0.50 38% 28.28 14.51 22 11 2005 1.31 2.57 1.55 0.50 32% 27.28 13.74 18 9 2004 NM 1.59 1.01 Nil Nil 26.01 14.30 26 14 2003 NM 1.37 -0.17 Nil Nil 51.30 16.51 NM NM

NA NA NA NA NA NA NA

2,463 1,153 613 333 -18.0 NM 160

1,181 465 255 84.3 -236 NM -208

820 361 149 25.4 175 8.70% 176

757 327 86.4 1.02 127 NM 200

843 377 84.9 9.75 209 6.32% 196

1,071 561 104 35.2 222 6.52% 208

936 453 164 37.1 269 8.37% 247

887 357 91.5 40.1 170 5.27% 161

824 371 257 41.3 -44.3 NM -40.3

Balance Sheet & Other Financial Data (Million U.S. $) Cash NA Current Assets NA Total Assets NA Current Liabilities NA Long Term Debt NA Common Equity NA Total Capital NA Capital Expenditures NA Cash Flow NA Current Ratio NA % Long Term Debt of Capitalization NA % Net Income of Revenue NA % Return on Assets NA % Return on Equity NA

170 1,358 13,142 924 6,540 4,007 11,692 58.5 772 1.5 55.9 6.5 1.3 3.6

400 1,020 10,795 692 3,478 4,911 9,826 16.8 -46.3 1.5 35.4 NM NM NM

124 351 2,067 257 314 1,354 1,668 7.42 325 1.4 18.8 21.5 9.5 13.8

319 490 1,624 267 Nil 1,202 1,202 22.0 286 1.8 Nil 26.4 11.7 16.0

438 707 1,782 368 Nil 1,298 1,298 35.1 280 1.9 Nil 23.2 9.8 15.0

840 1,058 2,175 410 401 1,285 1,686 44.8 312 2.6 23.8 19.4 9.9 16.6

453 685 2,029 274 413 1,220 1,633 37.8 411 2.5 25.3 26.4 13.2 21.7

39.3 315 1,711 190 445 1,054 1,499 28.0 253 1.7 29.7 18.2 8.9 16.6

133 412 2,298 263 754 1,267 2,021 36.9 217 1.6 37.3 NM NM NM

Data as orig reptd.; bef. results of disc opers/spec. items. Per share data adj. for stk. divs.; EPS diluted. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked. UR-Under Review.

Stock Report | June 3, 2013 | NYS Symbol: VRX

Valeant Pharmaceuticals International Inc

Sub-Industry Outlook
Our fundamental outlook for the pharmaceuticals sub-industry for the next 12 months is neutral. Although the sector continues to face top-line pressure from patent expirations on many top-selling drugs, as well as from foreign exchange fluctuations, we believe overall industry profits should hold up relatively well, helped by expanding sales of new innovative drug therapies and margin improvements accruing from cost restructurings and merger synergies. EPS comparisons should also benefit from common share buybacks. While we see new health care reform legislation continuing to negatively affect industry profitability, we see benefits accruing from significant expansion of the market stemming from new coverage provided to up to 32 million currently uninsured Americans starting in 2014. We favor the shares of firms with well defined growth prospects and generous dividend yields, as we believe they should perform relatively well over the coming quarters. Despite near-term effects from patent expirations and regulatory pressures on drug pricing, we still think long-term prospects for the sector remain favorable. Pharmaceuticals remains one of the widest-margin U.S. industries, with prospects enhanced by demographic growth in the elderly (which account for about 33% of industry sales) and new drugs stemming from discoveries in genomics and biotechnology. We expect FDA approvals of new molecular entities in 2013 to approach or possibly match the near record 39 approvals the agency cleared in 2012. Year to date through May 24, the S&P Pharmaceuticals Index was up 21.0%, versus a 15.7% rise in the S&P 1500 Composite Index. We expect prospects for the generic/specialty drug sector to remain favorable. We see a large number of major drugs losing patent protection over the next few years, providing significant opportunities for this group. We favor companies with rich generic pipelines, especially those with first-to-file generics with the potential for 180 days of marketing exclusivity, and competence in litigating complex patent issues. --Herman B. Saftlas
140 120 100 80 60 40 20 0

Stock Performance
GICS Sector: Health Care Sub-Industry: Pharmaceuticals Based on S&P 1500 Indexes Month-end Price Performance as of 5/31/13
160

2009
Sub-Industry

2010

2011

2012

2013

Sector

S&P 1500

NOTE: All Sector & Sub-Industry information is based on the Global Industry Classification Standard (GICS)

Sub-Industry : Pharmaceuticals Peer Group*: Drug Delivery

Peer Group Valeant Pharmaceuticals Intl DURECT Corp Depomed Inc Flamel Technologies ADR K-V Pharmaceutical Cl'A' K-V Pharmaceutical Cl'B' Stock Symbol VRX DRRX DEPO FLML KVPHQ KVPBQ Stk.Mkt. Cap. (Mil. $) 26,980 69 334 145 9 2 Recent Stock Price($) 88.21 0.79 6.01 5.70 0.19 0.20 52 Week High/Low($) 96.25/42.47 1.85/0.61 7.15/4.91 5.83/2.85 1.25/0.03 1.47/0.03 Beta 0.81 1.28 1.51 0.72 NM NM Yield (%) Nil Nil Nil Nil Nil Nil P/E Ratio NM NM NM NM NM NM Fair Value Calc.($) NA NA NA NA NA NA S&P Return on Quality IQ Revenue Ranking %ile (%) BC BNR D D 24 3 46 9 2 5 6.5 30.5 NM NA NM 14.7 LTD to Cap (%) 55.9 NA NA NA NA 11.9

NA-Not Available NM-Not Meaningful NR-Not Rated. *For Peer Groups with more than 15 companies or stocks, selection of issues is based on market capitalization.

Source: S&P.

Stock Report | June 3, 2013 | NYS Symbol: VRX

Valeant Pharmaceuticals International Inc

S&P Analyst Research Notes and other Company News
May 31, 2013 Valeant Pharmaceuticals International, Inc. at its annual general meeting held on May 21, 2013 approved election of Mr. Howard Schiller and J. Michael Pearson as directors of the company, each to hold office until the close of the 2014 Annual Meeting of Shareholders or until his or her successor is duly elected or appointed. May 28, 2013 UP 10.87 to 95.34... VRX agrees to acquire Bausch & Lomb Holdings Inc. for $8.7 billion in cash. May 28, 2013 12:06 pm ET ... S&P REITERATES BUY OPINION ON SHARES OF VALEANT PHARMACEUTICALS (VRX 90.51****): VRX agrees to acquire privately-held Bausch & Lomb (B&L) for $4.5B in cash, plus $4.2B to pay down B&L debt. We are raising our VRX target price by $16 to $102, based on our enhanced view of its long-term growth potential. We believe this is a highly attractive deal, moving VRX to leadersip in the rapidly growing ophthalmology space, in addition to its existing dominance in dermatology. The planned deal should be immediately accretive to cash EPS. VRX noted that if the transaction had occurred on Jan. 1, the deal would have been 40% accretive to 2013 EPS on a pro forma basis. /H. Saftlas May 28, 2013 Valeant Pharmaceuticals International, Inc. and Bausch + Lomb Holdings Incorporated announced that they have entered into a definitive agreement under which Valeant will acquire Bausch + Lomb for $8.7 billion in cash. Following the closing, Mr. Brent Saunders will join Valeant in an advisory role to help ensure a seamless transition and integration and Fred Hassan, Chairman of Bausch + Lomb's Board of Directors, will join Valeant's Board of Directors. In addition, Dan Wechsler, Executive Vice President and President of Bausch + Lomb's Global Pharmaceuticals, will join Valeant as Executive Vice President and Company Group Chairman, Ophthalmology and Eye Health. Bausch + Lomb's Chief Medical Officer Calvin W. Roberts, M.D. will also join Valeant as its Chief Medical Officer, Ophthalmology and Eye Health. The company also anticipates additional members of the senior management team to join Valeant. May 16, 2013 Valeant Pharmaceuticals International, Inc. announced that Dr. Laurence Paul has resigned from Valeant's Board of Directors due to expanded business, philanthropic, and personal commitments. Dr. Paul was originally elected to Biovail Corporation's Board of Directors in June 2002 where he served in several capacities, including heading at various times the audit and compensation committees and multiple special committees including the one that oversaw Biovail's side of the merger with Valeant in September 2010. Since the merger, Dr. Paul has been a member of the Nominating and Corporate Governance Committee, the Operations Committee and the Compensation Committee and has been a key member of and previously headed the Finance and Transactions Committee. May 15, 2013 May 8, 2013, Valeant Pharmaceuticals International, Inc. entered into a separation agreement with Jason Hanson, pursuant to which Mr. Hanson ceased serving as the company's Executive Vice President company Group Chairman, effective as of May 8, 2013. Under the Separation Agreement, Mr. Hanson will serve as a consultant to the company for a period of two months following the termination date. April 29, 2013 12:20 pm ET ... S&P REITERATES BUY OPINION ON SHARES OF VALEANT PHARMACEUTICALS (VRX 75.97****): An unconfirmed New York Times report says merger talks involving the planned $13B purchase of Actavis (ACT 105, Buy) by Valeant have stalled, as the parties failed to come to terms on price and other issues. We see large potential synergies ensuing from a possible merger with Actavis (the world's third largest generic drugmaker) significantly expanding the breadth and depth of VRX's global generic and branded drug base, while VRX's very low tax rate would be applied to the enlarged combination. We think a comprised deal is a strong possibility. We keep our $86 target on VRX. /H. Saftlas April 17, 2013 05:31 pm ET ... S&P REITERATES BUY OPINION ON SHARES OF ACTAVIS (ACT 97.73****): We raise our 12-month target price by $10, to $110, applying a peer 13.3X multiple to our $8.25 EPS estimate for 2013. We believe Actavis (formerly Watson Pharmaceuticals) is moving aggressively to build out its generic base via new launches and authorized generic deals. ACT recently launched generic versions of Pulmicort asthma treatment and Yaz oral contraceptive, and signed authorized generic deals for Zovirax, Ziana and Zyclara skin treatments with Valeant (VRX 73, Buy). Key long-term drivers we see include merger synergies, expansion in emerging markets and biosimilars. /H. Saftlas April 4, 2013 11:36 am ET ... S&P REITERATES BUY OPINION ON SHARES OF VALEANT PHARMACEUTICALS (VRX 72.04****): We are lowering our 2013 cash EPS estimate by $0.12 to $5.63, following sooner than expected generic competition in the company's important Zovirax herpes ointment line with indicated U.S. sales of $230M last year. While Valeant estimated a $0.30-$0.40 cash EPS hit from this setback in 2013, we expect accretion from recently acquired Medicis and other acquisitions, plus other measures to soften the impact. We keep our $86 target price based on our long-term DCF and P/E assumptions. We see Valeant's planned purchase of Obagi enhancing its solid dermatology market position. /H. Saftlas April 3, 2013 12:51 pm ET ... S&P REITERATES BUY OPINION ON SHARES OF VALEANT PHARMACEUTICALS (VRX 75.5****): We raise our target price by $6 to $86, on revised P/E analysis. VRX boosted its offer for Obagi Medical Products (OMPI 25, NR) to $24 per share from its original $19.75 bid, announced Mar 20, which Obagi had accepted. VRX had to counter the $22 unsolicited offer by closely held Germany-based Merz Pharma Group. Obagi's board accepted the amended all-cash offer, which expires April 23. Assuming no more unsolicited bids, we expect the acquisition to close in '13's first half and be immediately EPS accretive. We view the deal as part of VRX's aggressive acquisition program. /H. Saftlas, /P.Seligman April 2, 2013 Valeant Pharmaceuticals International, Inc. announced that Laizer D. Kornwasser has been named to Valeant's Executive Management Team and will assume the role of Executive Vice President/Company Group Chairman where he will be responsible for operations in Canada, U.S. Neurology and various other U.S. functions including managed care and distribution, effective February 1, 2013. Laizer D. Kornwasser was a Senior Executive at Medco Health prior to its acquisition by Express Scripts. At Medco he reported directly into the CEO and was a member of Executive Committee. He later assumed responsibility for the companies' channel and generic drug strategy and was President of its diabetes division, which focused on direct to consumer solutions.

Source: S&P.

Stock Report | June 3, 2013 | NYS Symbol: VRX

Valeant Pharmaceuticals International Inc

Analysts' Recommendations
Monthly Average Trend Buy
B

Wall Steet Consensus Opinion

Buy/Hold
BH

Hold
H

Weak Hold
WH

Sell S

No Opinion

VRX Trend

BUY/HOLD Companies Offering Coverage BMO Capital Markets, U.S. Equity Research BMO Capital Markets, Canadian Equity Research BofA Merrill Lynch CRT Capital Group LLC Canaccord Genuity Collins Stewart LLC Deutsche Bank GMP Securities L.P. Goldman Sachs JP Morgan Jefferies & Company, Inc. Morgan Stanley Morningstar Inc. National Bank Financial Paradigm Capital, Inc. Piper Jaffray Companies RBC Capital Markets S&P Equity Research Stifel, Nicolaus & Co., Inc. Susquehanna Financial Group, LLLP TD Securities Equity Research Thomas Weisel Equity Research UBS Investment Bank Wells Fargo Securities, LLC

Wall Street Average

B BH H WH S

Number of Analysts Following Stock 20 18 16

Stock Price ($) 120

80

40

2011

2012

2013

Of the total 24 companies following VRX, 17 analysts currently publish recommendations. No. of Ratings 6 6 3 1 0 1 17 % of Total 35 35 18 6 0 6 100 1 Mo. Prior 3 Mos. Prior 6 6 7 8 5 4 1 0 0 0 0 0 19 18

Buy Buy/Hold Hold Weak Hold Sell No Opinion Total Wall Street Consensus Estimates
Estimates 8 4 0 -4
J F M A M J J

Wall Street Consensus vs. Performance

2013 2014 2012 Actual $-0.38

2012

For fiscal year 2013, analysts estimate that VRX will earn $5.84. For the 1st quarter of fiscal year 2013, VRX announced earnings per share of $-0.09, representing -2% of the total annual estimate. For fiscal year 2014, analysts estimate that VRX's earnings per share will grow by 29% to $7.53.

2012

2013

Fiscal Years 2014 2013 2014 vs. 2013 Q2'14 Q2'13 Q2'14 vs. Q2'13

Avg Est. 7.53 5.84 29% 1.49 1.29 16%

High Est. 9.39 6.44 46% 1.49 1.38 8%

Low Est. 5.75 5.47 5% 1.49 1.19 25%

# of Est. 17 16 6% 13 13 0%

Est. P/E 11.7 15.1 -23% 59.2 68.4 -13%

A company's earnings outlook plays a major part in any investment decision. Standard & Poor's organizes the earnings estimates of over 2,300 Wall Street analysts, and provides their consensus of earnings over the next two years. This graph shows the trend in analyst estimates over the past 15 months.

Source: S&P, Capital IQ Estimates, Inc.

Stock Report | June 3, 2013 | NYS Symbol: VRX

Valeant Pharmaceuticals International Inc

Glossary
S&P STARS
Since January 1, 1987, S&P Capital IQ Equity Research has ranked a universe of U.S. common stocks, ADRs (American Depositary Receipts), and ADSs (American Depositary Shares) based on a given equity's potential for future performance. Similarly, S&P Capital IQ Equity Research has used STARS methodology to rank Asian and European equities since June 30, 2002. Under proprietary STARS (STock Appreciation Ranking System), S&P equity analysts rank equities according to their individual forecast of an equity's future total return potential versus the expected total return of a relevant benchmark (e.g., a regional index (S&P Asia 50 Index, S&P Europe 350 Index or S&P 500 Index)), based on a 12-month time horizon. STARS was designed to meet the needs of investors looking to put their investment decisions in perspective. Data used to assist in determining the STARS ranking may be the result of the analyst's own models as well as internal proprietary models resulting from dynamic data inputs. Singapore Pte. Limited's offices in Singapore, Standard & Poor's Investment Advisory Services (HK) Limited in Hong Kong, Standard & Poor's Malaysia Sdn Bhd, and Standard & Poor's Information Services (Australia) Pty Ltd.

Abbreviations Used in S&P Capital IQ Equity Research Reports

CAGR - Compound Annual Growth Rate CAPEX - Capital Expenditures CY - Calendar Year DCF - Discounted Cash Flow EBIT - Earnings Before Interest and Taxes EBITDA - Earnings Before Interest, Taxes, Depreciation and Amortization EPS - Earnings Per Share EV - Enterprise Value FCF - Free Cash Flow FFO - Funds From Operations FY - Fiscal Year P/E - Price/Earnings P/NAV - Price to Net Assest Value PEG Ratio - P/E-to-Growth Ratio PV - Present Value R&D - Research & Development ROE - Return on Equity ROI - Return on Investment ROIC - Return on Invested Capital ROA - Return on Assets SG&A - Selling, General & Administrative Expenses SOTP - Sum-of-The-Parts WACC - Weighted Average Cost of Capital

S&P Quality Ranking

Growth and stability of earnings and dividends are deemed key elements in establishing S&P's earnings and dividend rankings for common stocks, which are designed to capsulize the nature of this record in a single symbol. It should be noted, however, that the process also takes into consideration certain adjustments and modifications deemed desirable in establishing such rankings. The final score for each stock is measured against a scoring matrix determined by analysis of the scores of a large and representative sample of stocks. The range of scores in the array of this sample has been aligned with the following ladder of rankings: A+ Highest B- Below Average A High C Lower A- Above Average D Lowest B+ Average NR In Reorganization B Below Average

Dividends on American Depository Receipts (ADRs) and American Depository Shares (ADSs) are net of taxes (paid in the country of origin).

S&P Issuer Credit Rating

A Standard & Poor's Issuer Credit Rating is a current opinion of an obligor's overall financial capacity (its creditworthiness) to pay its financial obligations. This opinion focuses on the obligor's capacity and willingness to meet its financial commitments as they come due. It does not apply to any specific financial obligation, as it does not take into account the nature of and provisions of the obligation, its standing in bankruptcy or liquidation, statutory preferences, or the legality and enforceability of the obligation. In addition, it does not take into account the creditworthiness of the guarantors, insurers, or other forms of credit enhancement on the obligation.

S&P Capital IQ EPS Estimates

S&P Capital IQ earnings per share (EPS) estimates reflect analyst projections of future EPS from continuing operations, and generally exclude various items that are viewed as special, non-recurring, or extraordinary. Also, S&P Capital IQ EPS estimates reflect either forecasts of S&P Capital IQ equity analysts; or, the consensus (average) EPS estimate, which are independently compiled by Capital IQ, a data provider to S&P Capital IQ Equity Research. Among the items typically excluded from EPS estimates are asset sale gains; impairment, restructuring or merger-related charges; legal and insurance settlements; in process research and development expenses; gains or losses on the extinguishment of debt; the cumulative effect of accounting changes; and earnings related to operations that have been classified by the company as discontinued. The inclusion of some items, such as stock option expense and recurring types of other charges, may vary, and depend on such factors as industry practice, analyst judgment, and the extent to which some types of data is disclosed by companies.

S&P Core Earnings

S&P Capital IQ Core Earnings is a uniform methodology for adjusting operating earnings by focusing on a company's after-tax earnings generated from its principal businesses. Included in the S&P Capital IQ definition are employee stock option grant expenses, pension costs, restructuring charges from ongoing operations, write-downs of depreciable or amortizable operating assets, purchased research and development, M&A related expenses and unrealized gains/losses from hedging activities. Excluded from the definition are pension gains, impairment of goodwill charges, gains or losses from asset sales, reversal of prior-year charges and provision from litigation or insurance settlements.

S&P 12 Month Target Price

The S&P Capital IQ equity analyst's projection of the market price a given security will command 12 months hence, based on a combination of intrinsic, relative, and private market valuation metrics, including S&P Fair Value.

S&P Capital IQ Equity Research

S&P Capital IQ Equity Research U.S. includes Standard & Poor's Investment Advisory Services LLC; Standard & Poor's Equity Research Services Europe includes McGraw-Hill Financial Research Europe Limited trading as Standard & Poor's; Standard & Poor's Equity Research Services Asia includes McGraw-Hill Financial
Redistribution or reproduction is prohibited without written permission. Copyright 2013 Standard & Poor's Financial Services LLC. STANDARD & POOR'S, S&P, S&P 500, S&P CAPITAL IQ, S&P EUROPE 350 and STARS are registered trademarks of Standard & Poor's Financial Services LLC.

Stock Report | June 3, 2013 | NYS Symbol: VRX

Valeant Pharmaceuticals International Inc

Required Disclosures
In contrast to the qualitative STARS recommendations covered in this report, which are determined and assigned by S&P Capital IQ equity analysts, S&P Capital IQ ranks stocks in accordance with three other ranking methodologies: (a) S&P's Capital IQ's quantitative evaluations are derived from S&P Capital IQ's proprietary Fair Value quantitative ranking model. The Fair Value Ranking methodology is a relative ranking methodology. As a quantitative model, Fair Value relies on history and consensus estimates and does not introduce an element of subjectivity. (b) Global Markets Intelligence uses two different quantitative methodologies to determine recommendations for the Trade Detector research report. One methodology is based on a target price model, while the other methodology is based on four separate quantitative strategies. The STARS, quantitative evaluations and Trade Detector methodologies reflect different criteria, assumptions and analytical methods and may have differing recommendations. issued by Standard & Poor's Information Services (Australia) Pty Ltd ("SPIS"), which is regulated by the Australian Securities & Investments Commission; in Japan, research reports are issued by McGraw-Hill Financial Japan KK, which is registered by Kanto Financial Bureau; and in South Korea, research reports are issued by SPIAS, which is also registered in South Korea with the Financial Supervisory Service (FSS) as a cross-border investment adviser. S&P Capital IQ or an affiliate may license certain intellectual property or provide pricing or other services to, or otherwise have a financial interest in, certain issuers of securities, including exchange-traded investments whose investment objective is to substantially replicate the returns of a proprietary index of S&P Dow Jones Indices, such as the S&P 500. In cases where S&P Capital IQ or an affiliate is paid fees that are tied to the amount of assets that are invested in the fund or the volume of trading activity in the fund, investment in the fund will generally result in S&P Capital IQ or an affiliate receiving compensation in addition to the subscription fees or other compensation for services rendered by S&P Capital IQ. A reference to a particular investment or security by S&P Capital IQ and/or one of its affiliates is not a recommendation to buy, sell, or hold such investment or security, nor is it considered to be investment advice. Indexes are unmanaged, statistical composites and their returns do not include payment of any sales charges or fees an investor would pay to purchase the securities they represent. Such costs would lower performance. It is not possible to invest directly in an index. S&P Capital IQ and its affiliates provide a wide range of services to, or relating to, many organizations, including issuers of securities, investment advisers, broker-dealers, investment banks, other financial institutions and financial intermediaries, and accordingly may receive fees or other economic benefits from those organizations, including organizations whose securities or services they may recommend, rate, include in model portfolios, evaluate or otherwise address. For details on the S&P Capital IQ research objectivity and conflict-of-interest policies, please visit http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type &blobcol=urldata&blobtable=MungoBlobs&blobheadervalue2=inline %3B+filename%3DFinal_Research_Objectivity_PolicyEff_12-29-2011.pdf& blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf &blobkey=id&blobheadername1=content-type&blob where=1244053026758&blobheadervalue3=UTF-8

S&P Capital IQ Global STARS Distribution as of March 31, 2013

Ranking Buy Hold Sell Total North America 35.0% 56.0% 9.0% 100% Europe 27.7% 48.6% 23.7% 100% Asia 38.7% 50.3% 11.0% 100% Global 34.3% 54.2% 11.5% 100%

5-STARS (Strong Buy): Total return is expected to outperform the total return of a relevant benchmark, by a wide margin over the coming 12 months, with shares rising in price on an absolute basis. 4-STARS (Buy): Total return is expected to outperform the total return of a relevant benchmark over the coming 12 months, with shares rising in price on an absolute basis. 3-STARS (Hold): Total return is expected to closely approximate the total return of a relevant benchmark over the coming 12 months, with shares generally rising in price on an absolute basis. 2-STARS (Sell): Total return is expected to underperform the total return of a relevant benchmark over the coming 12 months, and the share price is not anticipated to show a gain. 1-STARS (Strong Sell): Total return is expected to underperform the total return of a relevant benchmark by a wide margin over the coming 12 months, with shares falling in price on an absolute basis. Relevant benchmarks: In North America, the relevant benchmark is the S&P 500 Index, in Europe and in Asia, the relevant benchmarks are the S&P Europe 350 Index and the S&P Asia 50 Index, respectively. For All Regions: All of the views expressed in this research report accurately reflect the research analyst's personal views regarding any and all of the subject securities or issuers. No part of analyst compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this research report. Analysts generally update stock reports at least four times each year.

General Disclaimers
For all jurisdictions: Where S&Capital IQ's research reports are made available in a language other than English and in the case of inconsistencies between the English and translated versions of a research report, the English version will control and supersede any ambiguities associated with any part or section of a research report that has been issued in a foreign language. Neither S&P Capital IQ nor its affiliates guarantee the accuracy of the translation. Assumptions, opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Past performance is not necessarily indicative of future results S&P Capital IQ, its affiliates, and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively, "S&P Parties") do not guarantee the accuracy, completeness or adequacy of this material, and S&P Parties shall have no liability for any errors, omissions, or interruptions therein, regardless of the cause, or for the results obtained from the use of the information provided by the S&P Parties. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages. Ratings from Standard & Poor's Ratings Services are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. Standard & Poor's assumes no obligation to update its opinions following publication in any form or format. Standard & Poor's ratings should not be relied on and are not substitutes for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. Standard & Poor's rating opinions do not address the suitability of any security. Standard & Poor's does not act as a fiduciary. While Standard & Poor's has obtained information from sources it believes to be reliable, Standard & Poor's does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives.

S&P Capital IQ Global Quantitative Model Recommendations Distribution as of March 31, 2013
Ranking Buy Hold Sell Total North America 40.0% 20.1% 39.9% 100% Europe 41.7% 21.3% 37.0% 100% Asia 54.7% 18.1% 27.2% 100% Global 46.8% 19.5% 33.7% 100%

Trade Detector Recommendations Distribution as of March 31, 2013 The Trade Detector research report was published after March 31, 2013. Ranking distributions will be provided as of June 30, 2013. About S&P Capital IQ's Distributors' S&P Capital IQ's research reports (the "research reports") have been prepared and issued by S&P Capital IQ and/or one of its affiliates. In the United States, research reports are prepared by Standard & Poor's Investment Advisory Services LLC ("SPIAS") and issued by Standard & Poor's Financial Services LLC ("S&P"). SPIAS is authorized and regulated by the U.S. Securities and Exchange Commission; in the United Kingdom, research reports are issued by McGraw-Hill Financial Research Europe Limited ("MHFRE"), which is authorized and regulated by the Financial Conduct Authority and trades as Standard & Poor's; in Hong Kong, research reports are issued by Standard & Poor's Investment Advisory Services (HK) Limited, which is regulated by the Hong Kong Securities Futures Commission; in Singapore, research reports are issued by McGraw-Hill Financial Singapore Pte. Limited ("MHFSPL"), which is regulated by the Monetary Authority of Singapore; in Malaysia, research reports are issued by Standard & Poor's Malaysia Sdn Bhd ("S&PM"), which is regulated by the Securities Commission of Malaysia; in Australia, research reports are

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Stock Report | June 3, 2013 | NYS Symbol: VRX

Valeant Pharmaceuticals International Inc

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Stock Report | June 3, 2013 | NYS Symbol: VRX

Valeant Pharmaceuticals International Inc

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