Reckitt to pay US$1.4 billion to end US opioid probes

Darnell Taylor
July 14, 2019

Reckitt Benckiser Group, a United Kingdom consumer goods company, will pay $1.4 billion to resolve allegations that the company profited by deceiving healthcare providers about the safety of its opioid-addiction treatment, according to The Wall Street Journal.

While Reckitt Benckiser denies all allegations that it engaged in any wrongful conduct, the board decided the agreement is in the best interests of the company and its shareholders.

"It avoids the costs, uncertainty and distraction associated with continued investigations, litigation and the potential for an indictment".

Last month, RB picked PepsiCo executive Laxman Narasimhan as its next CEO, becoming the latest industry heavyweight to turn to a company outsider to tackle faltering growth and new media-savvy rivals.

Finsbury's Faeth Birch and Philip Walters rep RB.

The London-based pharmaceutical firm said unexpectedly strong sales of Suboxone, a drug used to treat opioid addiction, buoyed its revenues.

Shares in Reckitt, whose products range from Mucinex cold medicine to Lysol cleaners and Durex condoms, closed up 2.5 percent for the day.

RB's outgoing boss Rakesh Kapoor launched a plan to split the group into two business units - one for health and one for hygiene and home products - under the same parent company.

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The settlement will cover multiple investigations into the company's subsidiary, Indivior (formerly known as Reckitt Benckiser Pharmaceuticals Inc.), and its alleged illegal marketing of its drug, the U.S. Department of Justice (DOJ) said.

Investors had feared the US probes could hinder the transformation.

Indivior left the RB group in 2014.

Another company has reached a settlement with the government over its role in the opioid crisis. "However, shareholders of consumer goods firm Reckitt Benckiser have reacted surprisingly well to news of today's big settlement with U.S. authorities".

Gail Levine, a deputy director of the FTC's Bureau of Competition, said: "Buprenorphine products are approved for use in the treatment of Americans struggling to overcome opioid addiction, and, in the middle of the nation's opioid crisis, Reckitt allegedly sought to deny those consumers a lower-cost generic alternative to maintain its lucrative monopoly on the branded drug".

Reckitt said it would increase its provision related to the investigations to $1.5bn to cover both the cost of the settlement and "any remaining litigation exposures".

"Because the fine will be met through existing borrowing facilities and cash flow, Narasimhan will inherit a company in slightly straitened circumstances, particularly as the balance sheet had already been stretched by the 2017 acquisition of Mead Johnson for an eye-watering US$17bn".

Indivior also raised its full-year profit and revenue guidance after Suboxone lost market share at a slower pace than expected, sending its shares 35% higher.

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