(Reuters) – Indivior PLC lost three quarters of its market capitalization on Wednesday and former parent Reckitt Benckiser Group PLC also fell after the US Department of Justice accused the UK drug maker of illegally increasing prescriptions for its blockbuster opioid-dependent treatment. 19659002] An indictment filed in the federal court of Abingdon, Virginia, Indivior allegedly made billions of dollars by deceiving doctors and health care plans to believe that the movie version of its Suboxone treatment was safer and less susceptible to abuse than similar drugs.
The shares in the company crashed as much as 80%, wiped out £ 620 million ($ 811.73 million) in market value and affected their lowest since listing in 201
Reckitt Benckiser shares, from which Indivior was spun, fell 5 % to the bottom of London's blue chip FTSE 100 index, erasing many of the gains made in 2019 after three tough years.
Reckitt was not charged but the indictmen t said that illegal marketing began before the spin-off.
"This charge is not against RB Group Plc or any other group company and we currently have no further or new information on this issue, except what has been publicly issued by the Ministry of Justice and individuals plc", Reckitt replied in a card statement on Wednesday.
It referred investors back to a previous statement that it acknowledged a $ 400 million disposal over the issue, but that its final cost
Indivior had succeeded as American officials increased their efforts to combat an opioid epidemic which President Donald Trump has declared a public health situation. US sales account for 80% of last year's $ 1 billion in revenue.
However, stocks have already been damaged by expectations of a decline in Suboxone sales with the arrival of a new generic contest this year and the company has been struggling to convince analysts and financial investors that it has an appropriate remuneration.
The company is scheduled to be arraigned in court on May 6 and plans to plead guilty to that hearing, according to a spokesman.
This is also bad for Reckitt, who has just begun to regain investor confidence following a series of one-time issues, including a security scandal in South Korea, a failed product launch, a cyber attack, and a manufacturing failure.
Its CEO Rakesh Kapoor, who oversaw several acquisitions and divestitures in order to transform Reckitt into a global consumer healthcare company, will retire this year, despite the fact that a large company, which shares Reckitt in two business units, is unfinished.
In an indictment accusing Indivior and its subsidiary Indivior Inc of conspiracy, anti-fraud, postal fraud and wire fraud, the government said it would try to forfeit it at least $ 3 billion.
"A negative judgment can have a significant negative impact on the company and its financial position and prospects," says Indivior.
The potential penalty is threefold last year's annual revenue. The company had a net cash of $ 681 million at year-end.
Indivior said in a statement that it was "extremely disappointed" by the department to address it and added that it would be contrary to it.
"The headline potential penalties are difficult, but a solution is also still possible," said Jefferie's analyst in a note.
Indivior has spent the last two years struggling for several legal battles and patent disputes in the United States with companies including Dr Reddy's Laboratories Ltd, Teva Pharmaceuticals Industries Ltd. and Mylan Pharmaceuticals Inc. to block them from launching generics.
Reckitt distended his drug deal to Indivior 2014, when the shrinking unit hit competition from cheaper generic rivals
Spinn-offen and the 2017 sales of Reckitt's food aggregates allowed Reckitt to focus on expanding his consumer health care, which focuses on aging populations and these more intense places for health and well-being in the West and rising income on developing markets.
In addition to worrying about Reckitt's direct liability towards fee ern, worried investors on Wednesday about a possible game play effect on Reckitt's infant business.
The company had previously flagged implications including "potential criminal prosecution against the group or employees, with reputation impact, distraction and potential non-compliance that could theoretically be extended" to their infant's business.
The business, which sells the Enfamil formula, derives part of its US government sales contract that provides a program to support low-income parents.
Reckitt said on Wednesday that the risk for infant companies was theoretical and considered "very unlikely and just a remote opportunity".