FTSE 250 pharmaceuticals group Indivior beat revenue targets in 2016, but charges related to a string of legal complaints in the US meant its pre-tax profits fell by almost two thirds.
The Slough-based group’s revenues increased 4 per cent compared to 2015, to $1.06bn, ahead of its initial target of $945m to $975m.
However, pre-tax profits dropped 65 per cent, to $98m thanks to a $220m charge related to its legal battles, and the company warned that the final costs could be significantly higher.
The company said operating profit fell 57 per cent to $149m, while net income was down 85 per cent to $35m and earnings per share fell 84 per cent to 5 cents.
But fourth-quarter results showed an improvement on the same period in 2015. Operating profit in the final three months of the year was up 87 per cent to $71m while net income rose 111 per cent to $78m.
A criminal investigation related to Indivior’s flagship product Suboxone began in 2013, and it is facing separate legal action from states that allege it tried to keep generic versions of the drug off the market after its exclusive patent expired. It is also facing an appeal in a patent battle against Actavis and Par Pharmaceutical.
In a statement, the addiction drug specialist, which was spun off from Reckitt Benckiser in 2014, warned that the final cost of the litigation could be “materially higher” than the $220m reserve it had put aside, stating:
The Company continues in discussions with the Department of Justice about a possible resolution to its investigation. The Company cannot predict with any certainty whether it will be able to reach ultimate resolution with the Department of Justice or any or all of the other parties, or the ultimate cost of resolving all of the matters. The final cost may be materially higher than this reserve.
The company said it expects to grow revenues again in 2017, despite rising competition, with a target of $1.05bn to $1.08bn.
Shares in the group rocketed 20 per cent in August after it said it was likely to win approval from the US Food and Drug Administration to trial a new addiction control product by the end of 2017.
But they dropped 17 per cent in one day in September after news of further legal action broke.
In a note earlier this month, analysts at Cantor Fitzgerald said that market share and price of the Suboxone drug had held up better than expected in 2016 but said they felt the shares were trading too highly, warning that the company needed more drugs in the pipeline.