Investors have dumped Indivior (INDV) as the drug maker is summoned to court by 35 US states and the District of Columbia.

Shares slumped 15.9% to 274.3p, wiping £1.3 billion off its value, over allegations that the Slough-based company has blocked cheaper generic rivals from entering the market.

The issue centres on Indivior’s Suboxone product, an alternative to methadone that treats people with addictions to alcohol or drugs, such as heroin.

Indivior  INDV    Summary   Shares Magazine

The allegation is that the company blocked generic versions of the drug by getting patients to switch to a dissolvable strip version of Suboxone just as the tablet version’s patent expired in 2009.

The film version of Suboxone dissolves in the mouth to reduce cravings and address withdrawal symptoms.

By the time the tablet’s patent had expired the company had moved many of its customers onto the film version, of which there is no generic version. At the end of June the film had a 61% share of the US market.

There are not many events that spook investors like a lawsuit. It is not just the fees and time taken in defending the case, but the potential loss of future earnings if Indivior loses the case and cheaper versions of the drug start taking market share.

Indivior, which is a spinout from consumer goods and healthcare giant Reckitt Benckiser (RB.), has a treatment for schizophrenia in the pipeline as well as a longer-term treatment for alcohol addiction.

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Issue Date: 23 Sep 2016