Companies Considering Investments in Serbia Face Risks; Valeant Pharmaceuticals Issues Open Letter to Serbian Deputy Prime Minister

Business Editors

COSTA MESA, Calif.--(BUSINESS WIRE)--May 23, 2005--With Belgrade hosting the European Bank for Reconstruction and Development as Serbia seeks to increase its appeal to trading partners and foreign investors, Valeant Pharmaceuticals International (NYSE:VRX) warned of the risks facing companies considering investments in Serbia. In an open letter to Serbian Deputy Prime Minister Miroljub Labus, Valeant cited examples of Serbia's "continuing contempt for international law," including the Serbian government's refusal to abide by a binding international arbitration judgment, and its use of military force against a jointly-owned commercial facility.

The text of the letter is as follows:

May 21, 2005

Dear Mr. Deputy Prime Minister:

As your country hosts the European Bank for Reconstruction and Development's Annual Meeting and your government seeks membership for Serbia in the World Trade Organization and the European Union, it is the responsibility of Valeant Pharmaceuticals International to inform your potential trading partners and foreign investors of Serbia's continuing contempt for international law and the risks of investing in your country.

The community of nations and the international business community must be made aware that the lawless disregard for commercial property that Serbia has demonstrated in the past continues to this day. We do not wish for other companies to endure Valeant's experience as an investor in Serbia.

In particular,

-- In 1999, the Republic of Serbia deployed tanks and troops armed with machine guns to forcibly occupy Galenika, a commercial joint venture we legally owned with your country;

-- These troops ousted Valeant representatives from the facility, while a Serbian court arbitrarily and unilaterally cut Valeant's 75% interest in the joint venture by more than half;

-- Later that year, your country brought this dispute to the International Chamber of Commerce International Court of Arbitration (the International Tribunal), and agreed to be bound by its decision;

-- In November 2004, the International Tribunal issued a judgment in Valeant's favor, and ordered the government of Serbia to liquidate Galenika and pay Valeant at least US$50 million by February 2005;

-- Since then, despite several meetings and our willingness to discuss terms, your government has continued to evade its responsibility. In fact, so great is your government's contempt for the International Tribunal and for international law that you recently have claimed, groundlessly and outrageously, that we owe you compensation instead.

As an enterprise with many business partners worldwide, we accept that disputes can arise among partners in a joint venture. What we and others in the international business community cannot accept, however, is the absolutely lawless approach that Serbia continues to use in addressing such disputes.

We were initially hopeful that the changes that have occurred in Serbia since the dispute began might mean the beginning of respect for the rule of law and investor rights in Serbia. We are disappointed to find that, in fact, to date nothing has changed.


Robert W. O'Leary


Valeant Pharmaceuticals International

About Valeant

Valeant Pharmaceuticals International (NYSE: VRX) is a global, publicly traded, research-based specialty pharmaceutical company that discovers, develops, manufactures and markets pharmaceutical products primarily in the areas of neurology, infectious disease and dermatology. More information about Valeant can be found at www.valeant.com. E

DITOR'S NOTE: The European Bank for Reconstruction and Development is holding its annual meeting in Belgrade, Serbia on May 22 and 23.


Valeant Pharmaceuticals

Jeff Misakian, 714-545-0100 ext. 3309