Shares in Indivior (INDV) plummeted 18% to 405.3p after rival Dr Reddy’s Laboratories received approval from regulatory authorities for a generic version of Indivior’s opioid addiction therapy Suboxone Film.
Dr Reddy’s is launching ‘at risk’ its Buprenorphine and Naloxone Sublingual Film in the US, which could backfire as the company is still in litigation with Indivior.
Despite this risk, Dr Reddy’s is threatening to steal market share from Indivior, prompting panic selling from investors.
It has been a tough time for Indivior as it has been in legal disputes with several rivals who are developing generic versions of Suboxone.
Earlier this year, the addiction specialist warned its best-selling treatment could suffer a ‘rapid and material loss of market share’ if it failed to appeal a court ruling against another competitor Alvogen.
Indivior entered a settlement with Par Pharmaceutical in May, allowing the company to start selling a generic version of Suboxone from 2023.
It also lost a legal battle with Mylan over the patent for the same treatment in September.
WHAT IS THE POTENTIAL IMPACT?
Jefferies analyst James Vane-Tempest says full year guidance is at risk at Indivior as this was based on no material changes in US market conditions.
He forecasts earnings per share (EPS) in 2018 could be hit by up to 50% if Dr Reddy’s launches its generic film by 1 July and steals an 11% market share in the second half of the year.
Vane-Tempest is awaiting further details from Indivior on the potential impact and outlines the next steps the company can take.
These include seeking a court injection to stop the launch, releasing its own authorised generic or further asserting its three new patents.
‘If Indivior was to prevail in any of its ongoing legal challenges then Dr Reddy’s would be liable for damages,’ comments the analyst.
Vane-Tempest says Indivior's injectable drug Sublocade is a ‘far great value driver’ than Suboxone, but warns if momentum is stalls on the former, the value proposition becomes more challenging.
UPDATE: Indivior says its 2018 guidance remains unchanged until Dr Reddy's enters the market, but warns it will pursue all legal remedies.
The company says it will seek an immediate injunction.
