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Valeant shares collapse after Ackman exit

Shares of Valeant Pharmaceuticals fell nearly 10% in early trading Tuesday, after hedge fund manager Bill Ackman announced Monday that he was exiting his investment in the firm.

Data: Money.net; Chart: Andrew Witherspoon / Axios

Valeant was once a darling of Wall Street, after investors bought CEO Michael Pearson's pitch that Valeant would bring efficiencies to the pharmaceutical research and development process that would deliver big returns to investors. It turned out that whatever success Valeant had was based on price gouging, supported in part by a shady relationship with online pharmacy Philidor.

Why it matters: Bill Ackman lost his investors roughly $3 billion over the course his multi-year investment, the story of which underscores the the opportunity for the pharmaceutical industry to engage in unethical behavior as it attempts to profit from a captive base of consumers.