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
ebooks
ebooksA celebration of British elections
  • Get to the point
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

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power