U.S. charges pummel drugmaker Indivior, hurt Reckitt

(Reuters) – Indivior Plc lost 75 percent of its stock market value on Wednesday and former parent Reckitt Benckiser also fell after the U.S. Justice Department accused the British drugmaker of illegally boosting prescriptions for its blockbuster opioid addiction treatment.

Pharmacist Jim Pearce fills a Suboxone prescription at Boston Healthcare for the Homeless Program in Boston, Massachusetts January 14, 2013. REUTERS/Brian Snyder

An indictment filed in federal court in Abingdon, Virginia, alleged Indivior made billions of dollars by deceiving doctors and healthcare benefit programs into believing the film version of its Suboxone treatment was safer and less susceptible to abuse than similar drugs.

The British drugmaker had prospered as U.S. officials stepped up efforts to combat an opioid epidemic that President Donald Trump has declared a public health emergency. U.S. sales account for 80 percent of last year’s $1 billion in revenue.

Shares, however, had already been hurt by expectations of a slump in Suboxone sales with the arrival of new generic competition this year and the company has struggled to convince analysts and financial investors that it has an adequate replacement.

Shares in the company crashed 75 percent to 25.7 pence at 1000 GMT, their lowest since it listed in 2014 and less than a fifth of its closing price on that day. That wiped around 540 million pounds off its valuation.

Shares in Reckitt Benckiser, from which Indivior was spun out in 2014, slumped 5.6 percent to the bottom of London’s blue chip FTSE 100 index, erasing many of the gains made this year following improved performance after three tough years.

Reckitt wasn’t charged but the indictment said the illegal marketing began before the spin-off.

“This indictment is not against RB Group Plc or any other group company and we currently have no additional or new information in respect of this matter, apart from what has been publicly issued by the Department of Justice and Indivior Plc,” it said in a brief statement on Wednesday.

It referred investors back to a previous statement that it was recognizing a provision of $400 million relating to the issue.

POTENTIAL PUNISHMENT

In an indictment which charged Indivior and its subsidiary Indivior Inc with conspiracy, health care fraud, mail fraud and wire fraud, the government said it would seek to have it forfeit at least $3 billion.

“An adverse verdict may have a material adverse effect on the company and its financial position and outlook,” Indivior said.

The potential penalty is triple last year’s annual revenue. The company had net cash of $681 million at the end of the year.

Indivior said in a statement it was “extremely disappointed” by the department’s decision to charge it, and added it would “vigorously” contest it.

“The headline potential penalties are severe but a settlement is also still possible,” Jefferies analysts said in a note.

Indivior has spent the last two years fighting multiple legal battles and patent disputes in the United States with companies including Dr.Reddy’s, Teva and Mylan to block them from launching generics.

Reporting by Justin George Varghese in Bengaluru and Martinne Geller in London; editing by Patrick Graham/Keith Weir

Our Standards:The Thomson Reuters Trust Principles.

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