Drug makers are a harried lot these days. As if their plates were not heaped high enough already with troubles, the Justice Department is said to have served subpoenas to generic manufacturers in connection with an ongoing criminal investigation, according to Bloomberg.
Lannett Company, Inc. (NYSE:LCI), which develops, manufactures, packages, markets and distributes generic pharmaceutical products for a wide range of medical indications, crashed 26.6% to $17.25 on Thursday, with 10.10 million shares changing hands.
Keeping Lannett company in the market mayhem were other generic makers such as Impax Labs (-19.51%), ANI Pharmaceuticals (-23.35%) and Taro Pharma (-7.29%).
Lannett Company, Inc. (NYSE:LCI) and others allegedly colluded on prices
According to the Bloomberg report, the US Justice Department is conducting a criminal investigation on whether certain generic drug manufacturers and their executives colluded to raise prices.
Subpoenas have already been served including to Mylan NV and Teva Pharmaceutical Industries Ltd, the industry leaders.
Lannett figures in this list too, along with Impax Laboratories Inc., Covis Pharma Holdings Sarl, Sun Pharmaceutical Industries Ltd., Mayne Pharma Group Ltd., Endo International Plc’s subsidiary Par Pharmaceutical Holdings and Taro Pharmaceutical Industries Ltd.
“It’s against the law for competitors to agree to set prices or coordinate on discounts, production quotas or fees that affect prices,” said the Bloomberg article. “The federal government can prosecute companies for collusion and seek penalties and potentially send executives to jail.”
Meanwhile, Lannett reported mixed numbers for its fiscal first quarter.
Lannett Company, Inc. (NYSE:LCI) misses on revenue in FQ1
For FQ1, Lannett reported EPS of $0.77 which beat by $0.06, and revenue of $161.56 million which missed by $5.16 million, but was up a solid 51.8% year on year.
“Our first quarter performance includes strong sales on certain products, offset by the effect of competitive pressure on a number of our other products,” said Arthur Bedrosian, chief executive officer. “In addition, contract manufacturing revenues were lower than anticipated due to timing of product shipments.”
The company recorded an impairment charge of $65.1 million related to Methylphenidate Hydrochloride Extended-Release tablets.
For full year 2017, Lannett revised lower its guidance for net sales to $675 million – $685 million; down from $690 million – $700 million.
However it revised upwards its guidance for adjusted gross margin to 57.5% – 58.5%; up from 55% – 56%.