Can Indivior (INDV) recover from a major setback in its ongoing patent dispute? A US court concluded that an unbranded version of the group’s opioid addiction treatment – made by Indian pharma company Dr Reddy’s – does not breach Individor's patent, clearing the way for lower-priced competition. The highs of recent months – when many courts ruled in favour of Indivior’s various legal proceedings – have been replaced with a crashing comedown. Individor intends to appeal the US District Court for the District of Delaware's decision. The shares plummeted 31 per cent on the day of the announcement and have only made up a small amount of ground since.
Indivior has been attempting to satisfy a growing demand for addiction treatments, caused by an increase in the number of opioid addicts in the US. Its flagship drug, Suboxone, is prescribed for adults who are dependent on prescription or illegal drugs – a market currently worth about $2bn (£1.5bn) and growing by around 10 per cent a year.
But the UK group is not the only company active in this market. Mylan, Actavis and Teva are just a handful of the many pharmaceutical groups to have developed a similar drug. This rising competition caused Suboxone’s US market share to contract to 57 per cent by June this year, from 61 per cent six months earlier.
But 57 per cent market penetration will be nothing but a fond memory if Dr Reddy’s cheaper version of Suboxone does indeed find its way onto the shelves. The court’s ruling that the treatment bypasses Indivior’s patent means Dr Reddy’s will be allowed to launch its drug if it is given the green light by US regulators. Suboxone’s US sales contributed about 80 per cent of total Indivior revenue in 2016 and the arrival of Dr Reddy’s generic competition could wipe two-thirds off the top line within a matter of months, according to management.
However, analysts are keeping a positive stance. Although broker Numis has warned of a 25 per cent cut to 2018 forecasts if just one generic hits the market, analyst Paul Cuddon “sees little chance of Dr Reddy's launching in 2017”. The broker has retained its buy call on Indivior, citing the good value in the group’s shares following their mammoth fall.
Meanwhile, the impending launch of a monthly injection of Suboxone could yet be the drug’s saviour. Keeping opioid addicts on their treatment is a massive challenge in the US and doctors are more likely to prescribe drugs that require less patient responsibility.
