Valeant Pharmaceuticals is the hottest stock in the hottest sector (pharmaceuticals and biotech). It also has the strangest business model: it acquires existing companies, strips them of most of their research and development and a large proportion of their other staff and extracts huge margins.

As John Gapper observed in the FT: if the entire industry adopted Valeant's approach, drug discovery would grind to a halt.

Gapper's article (accurately) stated:

Valeant's business model is as simple as its accounting and tax structure are complex. While at McKinsey, Mr Pearson [the Valeant CEO] concluded that the industry he advised was spendthrift, not only in the sums it spent on headquarters and staff but in its investment in drug discovery. Employing scientists to search for new drugs was a waste of money because they often failed.

When he got the chance to put his ideas into practice he cut Valeant's research to 3 per cent of revenues – compared with about 19 per cent at big pharma companies – and acquired products by buying other companies with debt. Valeant has taken over more than 35 companies since 2008, including Bausch + Lomb, which it acquired for $8.7bn last year.