Reckitt Benckiser hurt as rivals steal heroin march

 

Shares in Reckitt Benckiser took a tumble yesterday on news that its competitors will be able to make heroin-dependency drugs to compete with the consumer goods group.

Reckitt had been trying to slow down competitors' plans to make rival drugs after it lost US patent protection for its heroin-dependency treatment drug Suboxone in 2009. But yesterday investors reacted to news that the US Food and Drug Administration had rejected Reckitt's petition to force rivals to take more precautions with the drugs packaging.

Reckitt's shares took a hit and ended 135p lower at 4,381p. Not only has Reckitt lost its plea, but two generic drug makers have been given the go-ahead to enter the Suboxone tablet market with drugs that contain its key buprenorphine ingredient.

The Dettol-to-Durex maker introduced a film-strip version of Suboxone that is less likely to be taken accidentally by children. It will stop producing Suboxone in tablet form next month. It had hoped packaging for the opiate substitute would become regulated to make it more expensive for rivals to produce.

But the FDA decided that data presented by Reckitt did not necessitate the regulation that the company had suggested, which had included educational campaigns and child-resistant packaging.

Reckitt had previously pointed out that there is evidence of a rise in abuse of the medicine by children, who are able to open packets of drugs in tablet form.

It said yesterday it was "disappointed" by the FDA's decision. But it added that it will "continue to work with the FDA on safety enhancements", and remains "committed to maintaining its own high level standards for safety, including the use of child resistant, unit-dose packaging". Jefferies' Alex Howson said the entry of rivals into the market has been "a well-flagged risk for Reckitt" but some investors had forgotten these risks – until yesterday.

About 90 per cent of Suboxone tablet business and 70 per cent of the film business could be lost to generics, and Jefferies estimates 2013 Suboxone profits could reduce by 17 per cent to £382m.

However, analysts think the share sell-off in the Slough-based company has been overdone.

Deutsche Bank's Harold Thompson thinks Reckitt's repeated communication to "expect the worst on generic entry" means the profit impact on the group could be more measured than the investors think. Mr Thompson points out that more than 95 per cent of Reckitt's group profits are not related to US Suboxone tablets.

Analysts expect the group's household goods division, which includes brands such as Clearasil, Cillit Bang and Strepsils, will perform well this year.

Mr Thompson said he thinks the shares are still worth buying while Mr Howson added: "There will soon be "an attractive entry point [for the shares], given that the core business has seen substantial improvement of late."

He thinks "a major positive catalyst" would be the sale of the pharmaceuticals business altogether, as the market would "reward the improved visibility".

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas