Suboxone maker Reckitt Benckiser Group (RB Group) will pay the USA government a record $1.4 billion to end criminal and civil probes into the marketing of its addiction treatment medication, making it the largest settlement related to the opioid crisis in US history, authorities said on Thursday.
Though UK-based RB maintains it did nothing wrong, the board opted to make peace with feds in the best interests of the company and shareholders.
While the settlement is significantly higher than the $400mn that the consumer goods group had set aside to cover the cost of the investigations, analysts said it could allow the company's new chief executive to focus on a turnaround plan. 'As new CEO Laxman Narasimhan steps in (effective September 1), this clarifies the legal environment for RB and should allow the new management to focus on the RB 2.0 transformation, JP Morgan analysts wrote in a note.
Reckitt Benckiser shares rose 2.6% to 65.95 pounds at 0839 GMT on July 11.
Reckitt is in the process of separating its business into two divisions, one focusing on health, and the other on hygiene and household products.
The settlement is the largest recovery for opioid drug mis-marketing in USA history, according to the Department of Justice, and is made up of $647m to the federal government, $700m to states and $50m to the Federal Trade Commission.
Investors had feared the US probes could hinder the transformation.
The resolution is the largest recovery by the USA in a case concerning an opioid drug and includes the forfeiture of proceeds totalling $647 million, civil settlements with the federal government and the states totalling $700 million, and an FTC settlement. Thursday's settlement was only with RB Group, and not Indivior. "However, shareholders of consumer goods firm Reckitt Benckiser have reacted surprisingly well to news of today's big settlement with U.S. authorities". The company said its Suboxone film opioid-addiction treatment outperformed in terms of market share, relative to expectations.
"The danger is that Narasimhan will be operating with one hand tied behind his back", Mould told the Reuters news agency.
Shares in Indivior have surged after the drugs giant raised its revenue and profit guidance for the year, following a better-than-expected first-half performance. The settlement amount will be funded through existing borrowing facilities and cash generation, Reckitt said.
The company said it would increase its provision related to the investigations to $1.5 billion to cover both the cost of the settlement and "any remaining litigation exposures".