The Indivior Indictment Could Risk Reckitt Benckiser’s Investors

  • Apr 11, 2019 BST
  • Team Kalkine
The Indivior Indictment Could Risk Reckitt Benckiser’s Investors

On Tuesday, A federal jury based in Virginia summoned Indivior Inc (INDV) for connection in an alleged scheme to push prescriptions of opioid treatment Suboxone film.  US Department of Justice said the company has unlawfully earned billions of dollars in revenue from Suboxone Film prescriptions by defrauding health care providers and health care benefit programs into believing that Suboxone Films is safer and less susceptible to diversion and abuse than other.

After the news hits, shares of the Indivior Plc crashed as much as 80% in the Wednesday's session, taking out £620 million in the market capitalisation and touched their lowest since it got listed on the stock exchange.

5-day Daily Price Chart (as on April 11, 2019) before the market close. (Source: Thomson Reuters)

At the time of writing (as on April 11, 2019, at 01:08 PM GMT), the shares of Indivior were quoting at GBX 30.40 and added 0.30 points or 0.99% against its black Wednesday’s closing price. After its shares witnessed a steep plunge on April 10, 2019, stock’s one-year price return stood at negative 92.49% and in last 5-days, stock’s price return stood at negative 69.3%. Indivior shares have registered a 52w high price of GBX 504.60 and a 52w low price of GBX 20.98, and at the current price level, as quoted in the stock chart, shares were trading 94.04 per cent below its 52w high price level.

Post the verdict of US Department of Justice on Indivior and on its subsidiary Indivior Inc, the government said they would penalise Indivior to the tune of £3 billion.

After this announcement, one spoke person from Indivior said, the £3 bn penalty could brutally dent our company, financials and future outlook as well. The potential fine is three times of the last year's revenue. At the end of the last financial year, Indivior had net cash of $681 mn.

Reckitt Benckiser

Shares of consumer goods giant Reckitt Benckiser (RB), from which Indivior was spun-off, dipped by around 7% in the Wednesday's market session to the top laggard of London's broader FTSE 100 index.

The consumer goods giant Reckitt spun off its pharmaceuticals business in 2014 in to Indivior Inc, as the pharma segment was experiencing intense challenges from other inexpensive generic drug rivals.

One of the brokers wrote in a note that RB's revenue could be impacted if its baby formula products were barred from US government food aid programs as a result of the legal case. The consumer goods giant also indicated this in its previous annual report, but the company declined to comment on this further.

5-days Daily Price Chart (as on April 11, 2019) before the market close. (Source: Thomson Reuters)

At the time of writing (as on April 11, 2019, at 02:02 PM GMT), RB’s shares were quoting at GBX 5,928 and declined by 51 points or 0.85% against its previous day close. Post US Department of Justice verdict shares of RB witnessed price fall and in last 5-days, stock’s price return stood at negative 6.13%.

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