Opioid epidemic boosts sales at Indivior

Indivior (INDV) is sometimes dismissed as a single-product company with an image problem. The pharma group, which specialises in the treatment of opioid addiction, was fined $600m (£442m) by the US Department of Justice in 2020 following a drugs marketing scandal. Its former chief executive was subsequently sentenced to six months in federal prison, sparking a shareholder revolt over pay. To top it all off, the company’s products are vulnerable to competition and extremely difficult to get to market.

However, it is worth reassessing Indivior's prospects now its legal woes are behind it. After posting a $156m loss in 2020, it has swung back into profit and expects sales in 2022 to be well ahead of consensus guidance.

The company’s biggest asset is Sublocade, an injectable which is used to treat opioid addiction. Sublocade generated net revenue of $244m in 2021 – up 88 per cent on 2020 – and was used to treat almost 50,000 patients. 

Demand is likely to remain strong. Indivior predicted long-term US market growth "in the mid- to high-single digit percentage range due to increased severity and overall public awareness of the opioid epidemic and approved treatments”. In less sanitised language, America’s addiction crisis is getting worse, which should boost sales.

Indivior has revealed plans to diversify, however. Perseris, which is used to treat schizophrenia, generated $17m of revenue in 2021, up 21 per cent year on year. The company is now expanding its Perseris sales force to achieve US national coverage in 2022. It’s also important to note that Indivior is awash with cash, which can be reinvested in the business, or put towards acquisitions. The company is also pondering a US listing, which could improve visibility. 

None of this counteracts the fact that the development and approval of Indivior’s products is inherently uncertain and time-consuming. However, the company looks set to continue playing an important part in tackling America’s opioid problem. A cautious buy.

Last IC View: Buy, 154p, 29 Jul 2021