NEW YORK, April 30 (Reuters) - Warren Buffett and Charlie Munger made clear that they are no fans of embattled drugmaker Valeant Pharmaceuticals International Inc .
"In my view, the business model of Valeant was enormously flawed," Buffett said at the annual Berkshire Hathaway meeting on Saturday. Buffett responded to a question about whether he agreed with his right-hand man, Charlie Munger, who last year called Valeant's core strategy of buying smaller pharmacies and then raising prices of their drugs "deeply immoral."
Buffett implied that Valeant was similar, in some respects, to "chain letter" companies designed to fool investors.
Shares in Valeant have lost 87 percent of their value from their 2015 high, and its former chief executive was called to testify before Congress this week about the company's drug-pricing policies.
Buffett said the Sequoia Fund, which traces its roots to Buffett, took an "unusually large position" in Valeant, mainly a result of the fund becoming "overly entranced with the business model."
Buffett noted the money manager responsible for Sequoia's investment in Valeant, then-chief executive Robert Goldfarb, has left the fund. Buffett said he also was approached by multiple people asking if he wanted to invest in Valeant and meet former Valeant CEO Michael Pearson. Buffett said he declined to do either of those things, and was wary of the company from the very beginning.
All told, Buffett expressed support for portfolio managers of the Sequoia, which has long invested in Berkshire and shared similar values, characterizing them as "very smart, decent people."
Munger concurred that Sequoia "reconstituted" itself. He added: "We think the whole thing is fixed. Valeant was a sewer, and those who created it deserved the opprobrium they got." (Reporting By Jennifer Ablan and Trevor Hunnicutt)