Sometimes a lowly share rating is a sign of value, but other times it is the sign of a value trap. We think the latter is true in the case of Indivior (INDV), the pharmaceutical business that was spun out of consumer goods giant Reckitt Benckiser (RB.) last year. The company's flagship drug, Suboxone Film, a buprenorphine medication that helps wean heroin addicts off their dependency, is under significant pricing pressure from rivals and competition only looks set to intensify. That leaves investors pinning much of their hope on the company's future product pipeline, but it is far from certain this can deliver before serious damage is done to sales.
- Stable market share
- Pricing pressure not immediate
- Revenues declining
- Profits declining
- Suboxone faces pricing and generic threat
- Risk of clinical failures for product pipeline
Indivior's share price has been buoyed recently by a better than expected performance from Suboxone. In the first nine months of the current financial year, Suboxone Film, which accounts for almost four-fifths of group revenues, managed to cling onto its 59 per cent market share - although that compares with 63 per cent on average in 2014. This better than expected outcome for the first three quarters led management to tweak full-year guidance upwards.