Valeant chief executive Michael Pearson has been ousted from the company following the share price losing 50 per cent of its value last week and flirting with a debt default

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Trading in Valeant shares were stopped ahead of a company announcement (Source: Getty)

Canadian drug giant Valeant has announced it's going to replace chief executive Michael Pearson.

Valeant said in a statement it has kicked off a search for a new CEO, with Pearson continuing as both chief executive and director until his replacement is appointed.

The firm has also named activist investor Bill Ackman, CEO of Pershing Square Capital Management, to its board of directors.

Robert Ingram, chairman of the board, said:

While the past few months have been difficult, Valeant has a collection of leading brands, valuable franchises and great people, and I am confident that the company will be able to rebuild its reputation and thrive under new leadership.

Shares in troubled pharmaceutical company were suspended in the US in pre-market trading earlier after rising as much as nine per cent in early trading. Over nine million shares were traded in the first 10 minutes of the day.

The company also updated investors over its ongoing accountancy issues, revealing $58m in net revenue relating to sales to Philidor in the second half of 2014 should not have been recognised.

Read more: Pershing ends 2015 with a 20.5 per cent loss thanks to falling Valeant Pharmaceuticals share price

Valeant is in the process of restating its financial statements from last year and will include them in its delayed annual report for the year ended December 31, 2015.

The company intends to file the report with the Securities and Exchange Commission and the Canadian Securities Regulators on or before 29 April.

Former chief financial officer and current board member of Valeant Howard Schiller has denied accusations from the company that he engaged in improper conduct following an internal investigation, and has refused to resign.

Howard Schiller, who was CFO from December 2011 to June, 2015, said:

At no time did I engage in any improper conduct that relates to any restatement of revenue the Company is considering. In addition, at no time did I ever provide any incorrect information to the Audit and Risk Committee or the Company’s outside auditors regarding this accounting issue.

It's claimed Schiller was behind the filling of incorrect information to the company’s auditors, contributing to the misstatement of its results.

Last week the big pharma firm's shares had their worst day on record, ditching 51 per cent of value after the company reported revenue down 12 per cent year on year and worsening outlook for 2016.

A delay in filing its annual report could pose a debt default risk.

Read more: "Most hated" pharma exec Martin Shkreli arrested

Valeant's share price has lost around 85 per cent since highs in August last year as its struggled to justify its controversial business plan.

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