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It’s been quite the fall from grace for Indivior shares this morning – down up to 40% to levels traded last July – after a US court ruled that competitor drugs for its Suboxone Film for heroin addiction treatment don’t infringe on its patents. Generic competition has already trimmed Indivior’s US market share for the drug from 61% in H1 2016 to 57% at the end of Q2 2017. Dr Reddy’s version has yet to receive FDA approval, however, investors have reacted logically to the prospect of even more and accelerated generic competition eroding up to 80% of Indivior’s already waning US market share for the drug “within months”, putting at risk income from a drug that represented ~80% of 2016 FY group revenues.
A potential material impact to say the least, putting in jeopardy upwardly revised FY guidance from end-July which unfortunately assumed no generic threat. A negative final outcome would likely change the dynamic of the company, pinning nearly all hopes on pipeline prospect RBP-6000 (also for opioid use disorder). The company believes this has blockbuster potential ($1bn sales), and it was recently (end-July) granted priority review by the FDA, however, the regulator’s target action date of 30 November will seem like a long way off for those who bought shares over the past twelve months. It could be a rough three month wait.
Mike van Dulken, Head of Research, 1 Sept 2017
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
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