Famous investment firm Paulson & Co has acquired an undisclosed stake in Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP) as the drug maker recovers from inventory pileup issues and the exit of its chief financial officer.

Paulson & Co’s acquisition in Salix headlines its health-care holdings, as it is also the third-biggest shareholder of Shire Plc.

Paulson’s stake in Salix

Citing people familiar with the developments, Olivia Oran, Nadia Damouni and Jessica Toonkel of Reuters report that the hedge fund firm Paulson & Co has taken a stake in the specialty pharmaceuticals company Salix Pharmaceuticals, though the size of Paulson’s stake was not immediately clear.

Paulson’s move comes as Salix has recently been confronting a host of problems.

In November, the specialty pharmaceuticals company announced that inventory supply levels for its irritable bowel syndrome drug Xifaxan and other drugs were higher than the company had previously indicated. Mirroring the news, Salix Pharmaceutical’s shares dropped 37%.

salix pharmaceuticals

On Tuesday, Salix also disclosed that it would cut sales to wholesalers for three of its four key drugs to fix the inventory oversupply issue. The company anticipates resolving the inventory issue by the end of 2015.

Salix also disclosed that its chief financial officer Adam Derbyshire had resigned and an audit committee would review the way the company characterized wholesale inventory.

As reported by ValueWalk, following the announcement of the CFO’s exit, Salix’s shared dropped over 33%. The company also trimmed its earnings and revenue forecast for fiscal 2014 after reporting weak financial results for the third quarter. The pharmaceutical company posted losses of $88.6 million or $1.39 per share and $355 million in revenue.

Calls off plans to acquire Cosmo Pharmaceuticals

The U.S. Food and Drug Administration delayed its estimated decision date on whether to approve Salix’s Xifaxan for treating irritable bowel syndrome. However, Salix said it was still confident of receiving the approval, anticipating peak-year sales of $2.1 billion.

In October, the specialty pharmaceuticals company has also backed out of a proposed Irish tax inversion with Italian firm Cosmo Pharmaceuticals S.p.A, taking a $25 million hit in the process. President and CEO Carolyn Logan of Salix attributed the reason for backing out to the changed political environment creating more uncertainty to the potential benefits.

Despite Salix facing several problems, Credit Suisse analysts enhanced its price target from $111 to $121 and maintained its Neutral rating. The analysts see the early drawdown of inventory as a positive as it returns focus to the base business. Moreover, the analysts believe the new 2016 EPS guidance is achievable.