MARKET REPORT: America’s opioid epidemic boosts sales at Indivior

America is in the midst of an opioid epidemic, and treating the problem is big business.

Nearly 50,000 people die each year from opioid overdoses, while a further 1.7m in the US suffer from disorders after taking prescription pain relievers.

The problem started in the 1990s when pharmaceutical giants prescribed opioids on a big scale, but the medical community failed to foresee that patients would become heavily addicted.

The US Department of Health has declared war on the crisis and one of the best ways to combat the problem is to promote overdose-reversing drugs.

One company that makes such treatments is Indivior, which is listed on the FTSE 250 in London but based in Virginia. Its suboxone is given to people who have started addiction treatment.

The opioid problem has got even worse during lockdown and as a result the company has upgraded forecasts and now expects to generate revenue of £534million this year, up from a previous estimate of up to £451million. 

The update will have come as a relief for Indivior and its investors. Last month it suffered a revolt at its annual meeting when 38 per cent of votes cast went against its pay report.

Stock Watch – Pendragon  

Car dealer Pendragon expects to swing to a half-year profit thanks to a surge in demand in May and June, but has warned of a shortage of new vehicles.

It expects to post underlying pre-tax profits of around £30million for the first six months of 2021, against underlying losses of £31million a year earlier with annual profits predicted to be £45-£50million, up from £8.2million last year.

It said trading had been ‘particularly strong’ this month and last, with the used car market leading the way and pent-up demand boosting prices. Shares rose 0.41 per cent, or 0.08p, to 18.5p.   

Shareholders objected to the decision to maintain bonuses for former chief executive Shaun Thaxter, despite him being jailed for his role in the US opioid crisis. 

Under Thaxter Indivior made misleading safety claims about suboxone to win endorsement from doctors. Shares were up 6.4 per cent, or 9.3p, at 154.6p.

But the FTSE 100 index was treading water for a second straight session, down 0.7 per cent, or 50.08 points, at 7037.47.

All eyes were on the Opec meeting today in what has so far been an excellent year for the oil industry as economies around the globe roar back to life.

As a result Brent crude prices have risen from $50 per barrel in January to hit $75 and the chatter is that prices will touch $100 a barrel before the end of the year for the first time since 2014.

Opec is expected to decide to raise output by 500,000 to 1m barrels a day at the meeting, according to RBC Capital Markets.

‘The coalition will answer the call to put more barrels on the market,’ the analysts report.

The oil industry is undergoing rapid change as concerns over climate change lead to actions that will cut fossil fuel consumption.

But many investors want to see producers ramp up exploration and refining projects.

BP was down 0.3 per cent, or 1p, at 315p, while Shell dipped 0.1 per cent, or 1.4p, to 1399p.

Another notable faller was Serco which will lose Track and Trace work as the virus begins to fade away. 

Labour party leader Sir Keir Starmer said the Test and Trace system had ‘failed’ in Serco’s hands, but the Government has repeatedly stood by chief executive Rupert Soames and Serco, handing it contract extensions.

Soames said: ‘Our view is that the use of Test and Trace will reduce substantially in the second half, but it’s likely something will continue into next year though. 

Government will likely want to keep a residual capacity, but I don’t think that’s going to cost a substantial amount of money.’ Serco fell 1.3 per cent, or 1.8p, to 135.7p.

Elsewhere on the FTSE 250, Morrisons was on the charge as brokers speculated that a fresh bid from Clayton Dubilier & Rice was imminent. 

The supermarket rejected the first bid which valued it at £5.5billion, because it said undervalued the company.

One broker said: ‘Word is a fresh bid is coming this week. Let’s see if it can get the board to the table this time around.’

Morrisons’ largest investors, including hedge fund Silchester, have so far declined to comment on any potential deal. Shares were up 4.5 per cent, or 10.7p, to 246.7p.