Over the past few years, the US government has made significant legislative changes to alleviate issues caused by drug addiction, an illness which impacts 2.4m Americans. In 2016, this resulted in a big increase in the number of doctors certified to treat addiction and, as such, the market for treatments is growing. That helped Indivior (INDV) - which sells an opioid addiction treatment, Suboxone Film - report a 4 per cent increase in net revenues.
But Indivior isn't the only company to have spotted the gap in the market. Competition is intense and, despite good sales growth, Suboxone only managed to increase market share by 1 percentage point to 61 per cent. Adding to the group's worries is the fact that Suboxone's patent protection is under heavy fire. Although the company recently won patent infringement trials against rival groups Actavis and Par, three more are ongoing.
These legal proceedings resulted in a $220m (£177m) charge in the third quarter, denting group profits. Strip out exceptional items and operating profit rose by 2.6 per cent to $387m.
The uncertainty of these legal proceedings has prompted conservative guidance for the year to December 2017. Management expects net revenue to remain flat at $1.05bn to $1.08bn, while broker Numis has forecast earnings per share to fall to 31.6ȼ (from 35ȼ in 2016).
INDIVIOR (INDV) | ||||
|---|---|---|---|---|
| ORD PRICE: | 336.9p | MARKET VALUE: | £2.43bn | |
| TOUCH: | 336.7-337p | 12-MONTH HIGH: | 382p | LOW: 136p |
| DIVIDEND YIELD: | nil | PE RATIO: | 84 | |
| NET ASSET VALUE: | * | NET CASH: | $131m | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
|---|---|---|---|---|
| 2012** | 1.34 | 884 | na | nil |
| 2013 | 1.22 | 695 | 68.0 | nil |
| 2014 | 1.12 | 561 | 56.0 | nil |
| 2015 | 1.01 | 285 | 32.0 | 12.7 |
| 2016 | 1.06 | 98 | 5.0 | nil |
| % change | +4 | -66 | -84 | - |
*Negative shareholders' equity **Pre-IPO figures £1=$1.25 †Exceptional dividend paid in line with de-merger arrangements | ||||
