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Indivior increases legal provisions

Investors balked at the news, but new drug launches are just around the corner
February 15, 2018

Indivior's shareholders (INDV) were spooked by news the drug manufacturer was forced to increase its provisions for a plethora of investigative and antitrust litigation matters in 2017, to $438m (£312m), from the $217m carried during its third-quarter. That included its ongoing dispute with Dr Reddy's, after a US court ruled an unbranded version of its opioid addiction treatment Suboxone did not breach Indivior's patent. 

IC TIP: Hold at 356p

Legislative changes to expanding opioid addiction treatment helped the drug group continue to grow its US sales. Net revenue in its largest market was up 2 per cent to $877m. However, competition from generic options eroded the market share of its Suboxone Film treatment to 57 per cent, from 61 per cent a year earlier.   

It increased its marketing, distribution and administration spend by 3.5 per cent to $707m, investing heavily in the run up to the US launch of Sublocade this month, its once-monthly Buprenorphine injection used to treat opioid addiction. Management expects it to generate peak annual sales of at least $1bn.

Meanwhile, RBP-7000, which is used to treat schizophrenia, has been submitted to the Food and Drug Association for approval. Management are setting up a separate business unit to launch the drug, targeting peak revenues of $200-300m annually.

Analysts at Numis expect cash profits of $416m in 2018, giving EPS of 36.9¢ (from $403m and 37¢ in 2018).

INDIVIOR (INDV)   
ORD PRICE:390.2pMARKET VALUE:£2.57bn
TOUCH:390-390.3p12-MONTH HIGH:437pLOW: 247p
DIVIDEND YIELD:nilPE RATIO:68
NET ASSET VALUE:*NET CASH:$376m
Year to 31 DecTurnover ($bn)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
20131.2269568nil
20141.1256156nil
20151.012853212.7
20161.06985nil
20171.091378nil
% change+3+40+60-
Ex-div:na   
Payment:na   
*Negative shareholders' equity   £1=$1.4