Indivior stock price remains under pressure following a £1bn opioid claims lawsuit

Indivior stock price remains under pressure following a £1bn opioid claims lawsuit
Written by:
Michael Harris
December 2, 2020
  • The former parent company Reckitt Benckiser filed a £1bn opioid lawsuit against Indivior
  • The legal claim is related to the smaller business marketing of its Suboxone Film drug
  • Indivior stock price plummeted by about 40% to 85p on Friday, before recovering to 100p

Indivior (LON: INDV) stock price plummeted on Friday after the news broke out that its former parent company Reckitt Benckiser filed a £1bn opioid lawsuit against Indivior, which is worth more than Indivior’s entire market value. 

Fundamental analysis: Suboxone drama continues

The legal claim is related to the smaller business marketing of its Suboxone Film drug, which got involved in the opioid crisis in the United States last year when a number of companies faced allegations that they enforced aggressive sales strategy that resulted in addiction and death. 

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The US justice department filed a lawsuit against Indivior who was claiming Suboxone Film was safer than similar drugs. In the indictment, the DoJ said Indivior referred patients to doctors the company knew it would carelessly prescribe the drug. 

The company “strongly believes that the claim is without merit and that it has strong grounds for defending against the claim should it be served,” said Indivior.

Reckitt didn’t admit any wrongdoing last year but it had agreed to pay $1.4 billion (£1.1 billion) fine to resolve the case, while in 2018, Indivior said it “pleaded guilty to one count of making a false statement relating to healthcare matters in 2012”. 

It said back then that it intends to “make payments to federal and state authorities totalling $600m over a period of seven years”.

It is understood that Reckitt’s latest move against Indivior represents a procedural step as the consumer goods company has to commence a claim within six years after the demerger. It’s also assumed that Reckitt has to file a formal claim within four months and that settlement discussion is still in progress.  

Technical analysis: Shares crash

Indivior stock price plummeted by about 40% to 85p on Friday, before recovering to 100p, meaning that the pharmaceutical company’s market cap is now standing at around £735 million.

Indivior stock daily chart (TradingView)

Stock’s attempt to recover on Monday failed as sellers rejected attempts to close the day above the 110p mark. This level, alongside the 100-DMA at 115p, creates a key resistance block that is likely to cap any attempts for a move higher.

Summary

Shares of Indivior crashed on the news that its former mother company Reckitt Benckiser filed a £1 billion lawsuit over the marketing of its Suboxone Film drug.