Please login to the form below

Not currently logged in
Email:
Password:

Mallinckrodt offloads CDMO for $250m

Move follows US opioid settlement

Mallinckrodt

Mallinckrodt has agreed to sell its contract development and manufacturing organisation (CDMO) BioVectra for $250m to private equity firm H.I.G. Capital. 

The pharma company will receive an upfront payment of $135m and a long-term note for $40m, with contingent payments of up to $75m for the CDMO. According to Mallinckrodt, BioVectra will also continue to supply it with an active pharmaceutical ingredient, to support its ‘speciality brands business’.

This will likely include the active ingredient for Acthar, which the pharma company has faced criticism for due to its inflated pricing. US health insurer Humana recently filed a lawsuit against Mallinckrodt, alleging that it overpaid $700m for Acthar.

It argued that illegal practices enabled Mallinckrodt and the former owner of the drug to increase the price from $40 to $39,000, which occurred over a period of 17 years.

Mallinckrodt is also facing mounting blame for its part in the opioid epidemic in the US. This deal with H.I.G. follows close on the heels of the pharma’s settlement with two counties in the US state of Ohio for its role in the fuelling the crisis.

The company agreed to pay $30m to settle allegations that it helped to fuel the opioid epidemic. It will pay $24m in cash and also donate $6m in generic products, which will include medicines used to treat addiction.

The offloading of its CDMO will surely help to recoup some of Mallinckrodt’s losses, but could be insufficient if it faces additional lawsuits for its part in the epidemic, which has been estimated to have claimed more than 400,000 lives over the past two decades.

Over 2,000 states in the US have filed lawsuits against a number of opioid manufacturers and distributors, with accusations that these pharma companies did not heed warnings that the opioid products being sold carried extreme risks of addiction.

With Johnson & Johnson becoming the first company to be found liable for the opioid epidemic in the state of Oklahoma, many companies are looking to settle out of court to avoid heftier fines.

Both Teva Pharmaceuticals and Purdue Pharma paid $85m and $270m respectively in out of court settlements. However, with lawsuits continuing to mount, these settlements may not be sufficient in avoiding court in the near future.

Following the announcement of Mallinckrodt's CDMO sale, shares jumped in pre-market trading to 13%. However, the stock has plummeted over the past three months due to the ongoing concerns that the company could go bankrupt because of continuing opioid litigation.

Article by
Lucy Parsons

11th September 2019

From: Sales

Share

Tags

Subscribe to our email news alerts

Featured jobs

PMHub

Add my company
dna Communications

Healthcare communications with unique thinking, insight and attitude...

Latest intelligence

Virtual MSL/Sales training programs and events
Top 10 ways to leverage the Impetus InSite Platform® for internal MSL/Sales training programs and events...
6 trends shaping the future of personalized medicine
Senior Consultant Leah Carlisle explores the key trends discussed at the 16th annual Personalized Medicine Conference, providing expert analysis and key recommendations for biopharmaceutical innovators....
Omnichannel strategies to revolutionize the healthcare professional experience
Fishawack Health’s omnichannel experts unite to reveal how medical and commercial teams can build more meaningful experiences for healthcare professionals. They discuss the opportunities of omnichannel and explore how the...