Valeant Pharmaceuticals Reports Fourth Quarter and Full-Year 2006 Results.

Product Sales Increase 15 Percent in Fourth Quarter; 13 Percent in Year

ALISO VIEJO, Calif. -- Valeant Pharmaceuticals International (NYSE:VRX) today announced fourth quarter and full-year results for 2006 reflecting higher product sales and increased operating profit.

Fourth Quarter 2006 vs. Fourth Quarter 2005 Highlights:

* Revenues increased 11 percent to $257.4 million compared to $232.2 million.

* Product sales increased 15 percent to $236.8 million compared to $206.1 million.

* Ribavirin royalties decreased 21 percent to $20.5 million compared to $26.2 million.

* Net loss from continuing operations was $22.1 million, or $0.23 per diluted share, compared to $44.8 million, or $0.48 per diluted share.

* Adjusted for non-GAAP items, income from continuing operations increased 54 percent to $26.0 million, or $0.28 per diluted share, compared to $16.9 million, or $0.18 per diluted share.

Timothy C. Tyson, president and chief executive officer, said, "We are very pleased to report strong top and bottom line improvements in 2006. We achieved our earnings goal for the year with an increase in adjusted earnings of more than 50 percent. Sales benefited from the addition and launch of important products and continued growth in our promoted brands. We reduced costs significantly in 2006 through our restructuring initiative and through our ongoing efforts to lower expenses. The restructuring saved the company $30 million in 2006 and is expected to save more than $50 million annually in 2007 and beyond. We are confident in our strategy to achieve continued sales growth and improvements in the bottom line through a focus on key products, continued development of our pipeline and the pursuit of opportunities in multiple markets around the world."

Full Year 2006 vs. 2005 Highlights:

* Revenues increased 10 percent to $907.2 million compared to $823.9 million.

* Product sales increased 13 percent to $826.0 million compared to $732.2 million.

* Ribavirin royalties decreased 11 percent to $81.2 million compared to $91.6 million.

* Net loss from continuing operations was $64.1 million, or $0.69 per diluted share, compared to $185.8 million, or $2.03 per diluted share.

* Adjusted for non-GAAP items, income from continuing operations increased 53 percent to $57.7 million, or $0.61 per diluted share, compared to $37.7 million, or $0.40 per diluted share.

Revenues:

Product sales improvements in the fourth quarter and full year were led by the acquisition of Infergen[R], the launch of Zelapar[R] and growth in key promoted brands, principally Efudex[R], Cesamet[R], Kinerase[R], Mestinon[R] and Diastat[R] AcuDial[TM]. Infergen was acquired at the end of 2005 and recorded sales in 2006 of $42.7 million. Excluding Infergen, sales increased 11 percent in the 2006 fourth quarter and seven percent in the 2006 year.

Promoted products increased 40 percent in the 2006 fourth quarter and 27 percent in the year, compared to the same periods last year. Excluding sales of Infergen, promoted products increased 31 percent and 16 percent in the 2006 fourth quarter and year, respectively.

The effects of foreign currency exchange increased product sales by $5.5 million in the 2006 fourth quarter and by $7.0 million in the 2006 year. Foreign currency had an unfavorable impact on operating income of $0.8 million in the 2006 fourth quarter and a favorable impact of $0.4 million in the year.

Regional Sales Performance:

North America product sales increased 42 percent in the 2006 fourth quarter and 32 percent in the year, compared to the same periods last year. Increases in both periods were primarily due to the acquisition of Infergen, new product launches and continued growth in promoted brands, principally Efudex, Cesamet, Kinerase, and Diastat AcuDial. Excluding Infergen, North America sales grew by 28 percent in the 2006 fourth quarter and 14 percent in the year. Efudex sales grew 30 percent in 2006 and were particularly strong in the fourth quarter due to a combination of factors, including the launch at the end of the year of the company's generic product, changes in wholesaler buying patterns, price increases taken earlier in the year and increased demand.

Sales in the International region increased five percent in the 2006 fourth quarter and 10 percent in the year, primarily due to increased sales of Bedoyecta[TM] and MVI[R]. Sales in Europe, Middle East and Africa (EMEA) grew two percent in the 2006 fourth quarter, but declined slightly in the year. The effects of foreign currency exchange increased EMEA product sales by $5.5 million in the 2006 fourth quarter and $4.6 million in the year. Several promoted products performed well in Europe, including Mestinon, Efudex, Solcoseryl[TM] and Bisocard[TM]. Europe continues to experience government controlled pricing pressures in many markets.

Financial Metrics:

The company's gross margin on product sales was 69 percent in 2006, compared to 70 percent in 2005. The decline was primarily due to the write off of inventory and a change in the mix of products that occurred during the year. In addition, the company recorded a $5.2 million charge to cost of goods sold in the 2006 fourth quarter for the transfer of manufacturing technology for Infergen.

Adjusted for non-GAAP items, selling expense was 32 percent of sales in 2006, compared to 31 percent in 2005. The increase primarily reflects costs for Infergen and product launches during the year. Adjusted for non-GAAP items, general and administrative expense was 12 percent of sales in 2006 versus 15 percent in 2005. The decline reflects reductions in overhead costs resulting from the company's restructuring initiative.

Research and development expense was 13 percent of sales in 2006, compared to 16 percent in 2005. The decrease primarily reflects cost control measures and a reduction in clinical trial activity compared to last year. Included in research and development expense in the fourth quarter was a $7.0 million milestone payment related to the development of retigabine.

Recent Developments and Expectations:

The company expects to continue to grow sales at or above pharmaceutical market growth rates and expects its operating metrics (excluding the impact of stock-based compensation) in 2007 and 2008 to be within the ranges specified in the table below. These metrics are compared to the company's performance in 2005 and 2006 as follows:

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(a) Includes non-GAAP adjustments. A reconciliation of GAAP to non-GAAP results is provided in Tables 2-4.

Conference Call and Webcast Information:

Valeant will host a conference call today at 9:00 a.m. EST (6:00 a.m. PST) to discuss its 2006 fourth quarter and year results. The dial-in number to participate on this call is [phone], confirmation code 6658657. International callers should dial [phone], confirmation code 6658657. A replay will be available approximately two hours following the conclusion of the conference call through Wednesday, March 7, 2007 and can be accessed by dialing [phone], or [phone], confirmation code 6658657. The company will also 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 global specialty pharmaceutical company that develops, manufactures and markets a broad range of pharmaceutical products primarily in the areas of neurology, infectious disease and dermatology. More information about Valeant can be found at www.valeant.com.

Zelapar, Efudex, Cesamet, Kinerase, Mestinon, Diastat AcuDial, Bedoyecta, Solcoseryl and Bisocard are trademarks or registered trademarks of Valeant Pharmaceuticals International or its related companies. MVI is a registered trademark in Mexico of Valeant Pharmaceuticals International or its related companies. Infergen is a registered trademark of Amgen, Inc., and Valeant Pharmaceuticals North America is the exclusive licensee from Amgen of this mark. All other trademarks are the trademarks or the registered trademarks of their respective owners.

FORWARD-LOOKING STATEMENTS:

This press release contains forward-looking statements, including, but not limited to, statements regarding expected savings from the company's restructuring initiative, the company's strategic focus and anticipated results, and the company's expected sales, margins, expenses, and earnings. 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 related to projections of future sales, product development and regulatory approval, the execution and success of the company's restructuring initiative and strategic plans, and other risks and uncertainties discussed in the company's filings with the SEC. Valeant wishes to caution the reader that these factors are among the factors that could cause actual results to differ materially from the expectations described in the forward-looking statements. Valeant also cautions the reader that undue reliance should not be placed on any of the forward-looking statements, which speak only as of the date of this release. The company undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this 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 in-process research and development expenses, special charges and credits, stock-based compensation expense, gains on litigation settlements, and results of discontinued businesses. 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, or, as in the case of stock-based compensation expense, adjusts for this impact since such amounts were not included in comparative periods. Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. Guidance is provided only on a non-GAAP basis due to the inherent difficulty in forecasting such items. 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.

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