In a bid to stretch its business into skin treatments, Spanish drugmaker Almirall may buy dermatology assets from sinking Valeant Pharmaceuticals – which is striving to reduce its massive debt.

The dermatology line of Valeant Pharmaceuticals, one of the most prominent pharmaceutical companies in Canada, is vast and includes renowned topical creams, gels and ointments used for a variety of skin conditions such as acne vulgaris (Aczone, Benzamycin), itching (pruritis) and inflammation (Dermatop cream), fungal infections (Loprox cream) and skin cancer (Efudex cream).

Besides dermatological products, Valeant Pharmaceuticals manufactures many other products for pain management, cardiovascular disease, infections, ophthalmology, gastroenterology and neurology.

Eduardo Sanchiz, CEO of Almirall, is currently looking to expand his company’s dermatology profile by cutting a handsome deal with Valeant Pharmacueticals, although admittedly the deal is still in the bud, “We’re still in very initial stages but there are things that could interest us,” said Sanchiz, “we’re studying the situation but waiting for more information”.

Once a thriving pharmaceutical giant, Valeant Pharmaceuticals is now a sinking ship. The company, burdened with a debt of $30-billion, is struggling to remain afloat. Key to the company’s survival is deciding which asset to sell without compromising its core businesses.

The crisis initially surfaced when Valeant’s pricing and distribution practices came under investigation by Congress and federal prosecutors last year. A sudden spike in drug prices invited both criticism and investigation from the US lawmakers. Ever since then, investigators have lost confidence in the company and its market capitalization has dipped from $90 billion to $11 billion. Valeant is currently in severe crisis and is looking towards other companies for survival and shoring up its finances.

Valeant seeks to eliminate the risk of bankruptcy by selling its assets. Last month, the Canadian giant was considering selling Egyptian drug maker, Amoun Pharmaceuticals which it had acquired last year for about $800 million. At the time, Valeant was looking to explore the pharmaceutical market in Middle East and Africa, however, Valeant is currently negotiating its sale with Goldman Sachs.

This year, the company is eyeing lowering its debt by more than $1.5 billion through the sale of non-core assets. In his first large meeting with investors at the recent UBS Global Healthcare Conference, Valeant Chief Executive Joseph Papa said the company was up to its eyeballs in debt and had to appease creditors especially since the company missed a series of deadlines for filing financial records and paying loans. When asked how the company planned to pay off its debt, Papa explained that Valeant would attempt to attract investors by selling its non-core assets outside of its main franchise.

Valeant has also lowered the prices of its two heart drugs – Nitropress and Isuprel. Additionally, it is looking to cut down the prices of two other drugs that came under scrutiny, i.e., Cuprimine and Syprine – drugs used to treat Wilson’s disease (a genetic disorder causing excess copper build-up in the body).

Almirall is a Spanish pharmaceutical giant spanning over 70 countries and five continents. The company mainly deals in dermatological products used for skin conditions including keratosis, (Actikerall), skin damage caused by sun exposure (Solaraze), and pruritis, itching, eczema, dermatitis, and scaling skin condition (Baneum cream). A buyout of Valeant’s dermatological line will provide a significant boost to the company’s thriving franchise.