By Justin George Varghese
(Reuters) – Shares of Indivior Plc fell more than 50 percent on Wednesday after the U.S. Justice Department accused the British drugmaker of illegally boosting prescriptions for the film version of its blockbuster opioid addiction treatment Suboxone.
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 Suboxone was safer and less susceptible to abuse than similar drugs.
Shares in the company, already hurt by expectations of a slump in Suboxone sales due to the arrival of generic competition this year, fell 57 percent to 45.8 pence, their lowest since listing in 2014.
The company has prospered as U.S. officials ramped 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 its revenue.
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.
Analysts said the company would struggle to pay a fine on that scale. It recorded revenue of $1 billion in 2018, and had net cash of $681 million at the end of the year.
“The headline potential penalties are severe but a settlement is also still possible,” Jefferies analysts said in a note.
“We believe it would require either a major rights issue or could lead the company to bankruptcy.”
Before Tuesday’s indictment, Indivior’s combined credit score – which measures how likely a company is to default in the next year on a scale of 100 (very unlikely) to 1 (highly likely)- was “5”, Refinitiv Eikon data showed.
Shares in Reckitt Benckiser, out of which Indivior was spun in 2014, also fell around 4 percent, putting it at the bottom of the London’s blue chip FTSE 100 index.
Reckitt wasn’t charged but the indictment said the illegal marketing began before the spin-off. The company was not immediately available for comment.
Indivior said in a statement it was “extremely disappointed” by the department’s decision to charge it, and added it would “vigorously” contest it.
Suboxone film is a U.S. Food and Drug Administration-approved opioid used by people recovering from opioid dependency. The indictment said Indivior’s scheme led to thousands of opioid-addicted patients using the drug.
The ruling company 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.
After losing a series of judgements, the drugmaker said earlier this year that it now faces potentially severe losses in market share to copycats in the immediate future.
Shares have lost nearly 90 percent of their market value since Dr. Reddy’s and Mylan’s generics were first approved by U.S. regulators in June 2018.
The company is pinning its hopes on its long-lasting opioid addiction Sublocade injection becoming another blockbuster and helping it reduce the dependence on Suboxone.
(Reporting by Justin George Varghese in Bengaluru; editing by Patrick Graham)