In the wake of Valeant’s Philidor controversy, the Southern Investigative Reporting Foundation (SIRF) recently decided to take a closer look at Valeant’s operations in Eastern Europe.

SIRF chose to focus on Valeant’s operations in Poland, which represent about 3.0 percent of the company’s total sales.

The Issue

While sales trends in Poland have been flat recently, corporate supply chain inventory levels appear to be rising. Rumors and accusations on Internet message boards surrounding Valeant’s Eastern European operations have become so bad that the company itself addressed them publicly in a statement, assuring investors that inventory levels in emerging markets typically stay between two and four months.

“Inventory levels can fluctuate from period to period even if there is no change in the absolute value of inventory due to fluctuations in market demand and other economic factors,” the statement read.

Why Rising Inventory Is Bad

When inventory levels in distribution channels climb, excess supply can tip…

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