Indivior ups revenue forecast on strong first half

Despite having a slim portfolio of drugs, pharmaceutical group Indivior (INDV) is reasonably confident about future sales growth. This is because most of its medicines treat one increasingly prevalent condition in North American markets: opioid use disorder. 

Heightened public awareness of opioid addiction, combined with action from lawmakers, has made it easier for people to seek help in the United States. In its half-year results, UK-headquartered Indivior said it “believes these regulatory and legislative actions will help to normalise the chronic disease of addiction and expand access to evidence-based [...] treatment”.  

Indivior’s net revenue in the first six months of this year increased by 24 per cent to $529mn (£422mn) at actual exchange rates, with its Sublocade injection being the primary engine of growth. The group has increased its full-year sales guidance from the upper limit of £1.04bn to almost £1.1bn based on its performance in the first half.

It also stands to benefit from the delayed release of a generic equivalent to Suboxone Film, another of its opioid addiction treatments. However, markets were unmoved by the company's upgraded guidance, likely because of fear surrounding ongoing antitrust litigation. 

The company has set aside $290mn to deal with the impact of the legal action. It agreed to pay $102.5mn from this total last month to settle claims brought by 41 US states and the District of Columbia. Indivior’s board has said it is confident that the remaining claims can be managed and that “it has meritorious [defences] against liability”.  

FactSet broker consensus puts Indivior’s forward price-to-earnings multiple at 15x for FY 2024, which we feel is undemanding given the strength of its earning potential. Buy.

Last IC view: Buy, 1,725p, 20 June 2023