Indivior shares tumble as company faces $3bn fine over 28 fraud charges
Indivior's facility in Henry Boot Way, Hull
By Hull Daily Mail | Posted: 10 Apr 2019
A £23m Hull research centre which develops heroin substitutes faces an uncertain future as the company behind it squares up to 28 fraud charges.
Indivior unveiled its state-of-the-art facility in Henry Boot Way in August 2017. The centre is focused on research and innovation into drugs which can help people battle opioid addiction and schizophrenia.
But a series of redundancies were made last month after Indivior was locked in a legal dispute with rival firm, Dr Reddy’s Laboratories, over its sale of a similar product called Suboxone in the US.
Now, the firm, with headquarters in the US, could be bankrupted as it faces a fine of up to $3bn after a grand jury in the Western District of Virginia issued an indictment of 28 fraud charges.
The felonies, issued in connection with a federal criminal investigation initiated by the US Department of Justice in 2013, detail a host of allegations including conspiracy to commit mail, wire and healthcare fraud.
According to the indictment, Indivior "obtained billions of dollars in revenue from Suboxone Film prescriptions by deceiving healthcare providers and healthcare benefit programmes into believing that Suboxone Film was safer, less divertible, and less abusable than other opioid-addiction treatment drugs".
Suboxone, an opioid addiction treatment, accounts for around 80per cent of Indivior's revenue.
Analysts at Jefferies said they do not believe Indivior has the resources to pay such a fine, "hence we believe it would require either a major rights issue or could lead the company to bankruptcy".
hares tumbled more than 72 per cent to 28.9p as investors fled from the stock.
The fallout also threatens to engulf Hull-based Reckitt Benckiser (RB), which owned Indivior until 2014.
Reckitt has set aside $400m to cater for any knock-on effects with shares in the company down nearly seven per cent at 5,977p.
Last month, an employee at Indivior said job losses had been made in recent months, and described the site as “a ghost town.”
Indivior confirmed a series of redundancies had been made, but said it remained committed to the site.
n employee, who did not want to be named, said: “At its peak there were about 80 of us working here in Hull.
“The problems have come about through a rival product which has come to the market and is threatening to undercut us.
“At least 30 people have lost their jobs. My job is safe for now, but a lot of people don’t know what is going to happen next.”
In February, a US court ruled the rival firm could resume selling its product.
The announcement came as a bitter blow to Indivior.
A spokesman at Indivior said: “In recent months we have unfortunately had to reduce the number of roles across the company, including in Hull, but our commitment to our mission remains unchanged and we look forward to returning to growth in the future as we focus on serving patients globally.”