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 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.
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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)
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