A massive lawsuit just erased $2.5 billion from drug giant Teva's market cap. Here's how much Teva and rival drugmaker Mylan could stand to lose in court.
- A major new lawsuit accuses 20 generic drug companies of working together to increase prices on drugs for HIV, cancer and other conditions. It hit many of the companies' stocks hard on Monday, amid widespread US market weakness.
- Teva and Mylan, two large generic drugmakers named prominently in the suit and another, earlier one, could pay as much as $4.3 billion and $2 billion respectively in total fines, UBS analysts said.
- Teva's US shares saw $2.5 billion in market cap wiped out on Monday, while Mylan had $1.1 billion in market value erased. Watch them trade here.
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A major antitrust lawsuit being brought by 44 US states against 20 generic drugmakers hit many of the companies' stocks hard on Monday, amid a broad-based drop in the US equity market.
Teva and Mylan, two major generic drugmakers named prominently in this lawsuit and another, similar one, could stand to lose more in the form of potential billion-dollar fines, according to new notes from analysts at UBS.
Filed in Connecticut district court on Friday, the latest lawsuit alleges that the 20 drug companies worked together in a "broad conspiracy to artificially inflate and manipulate prices, reduce competition and unreasonably restrain trade for more than 100 different generic drugs."
Those drugs included treatments for cancer, HIV and more, with price increases in some cases of more than 1,000%. In addition to the companies, the suit also names 15 individual senior executives as defendants, including several former Teva employees and Mylan's current vice president of sales.
Similar allegations were also made by US states in a separate antitrust lawsuit filed in 2016 against nearly 20 generic drugmakers, including Mylan and Teva, though the scope of that one was more limited
For Teva, total fines to resolve the latest suit and the 2016 one could come to $1.1 billion to $4.3 billion, UBS analysts said on Monday. Mylan, meanwhile, could stand to pay between $500 million and $2 billion for both cases, they said.
The latest lawsuit marks "another setback" for Teva and Mylan, UBS analyst Navin Jacob and team wrote.
It is "challenging to determine the dollar impact of these allegations given the early stage of the trial & opaque nature of the Gx industry," they said, calling their estimate a "high-level attempt."
Teva, the Israeli company that is the world's largest generic drugmaker and is named prominently in the suit, had $2.5 billion of its market value wiped out in US trading on Monday, while US generic drugmaker Mylan lost $1.1 billion in market value.
The lawsuit was also brought against other prominent companies, including Swiss drug giant Novartis's generic drug unit Sandoz, India-based generic drugmaker Dr. Reddy's, and US drugmaker Pfizer, all of which saw major stock drops on Monday.
Pfizer said in a statement that it has cooperated with the Connecticut attorney general since it was contacted over a year ago.
"We do not believe the Company or our colleagues participated in unlawful conduct and deny any wrongdoing," the statement said. "Greenstone has been a reliable and trusted supplier of affordable generic medicines for decades and intends to vigorously defend against these claims."
Other companies didn't immediately return requests for comment.
US markets declined on Monday, with the S&P 500 down 2.4%.