MARKET REPORT: Drug-fixing scandal hits Alliance Pharma shares

AIM-listed Alliance Pharma suffered a blow as competition regulators moved to ban its boss following a drug-pricing scandal. 

Peter Butterfield, who has run the firm since 2018, is facing a competition disqualification order (CDO) from the Competition and Markets Authority (CMA) after Alliance and three other healthcare groups were fined £35m amid accusations of conspiring to restrict the supply of prochlorperazine, a medicine designed to treat nausea, dizziness and migraines. 

The agreement is alleged to have caused the price of the drug paid by the NHS to skyrocket from £6.49 for a pack of 50 tablets to £51.68 between 2013 and 2017 – a rise of 700 per cent. Alliance said it was ‘very disappointed’ by the CMA’s decision to disqualify Butterfield and that it ‘fundamentally disagrees’ with the regulator’s decision to fine the firm which it is appealing against. 

‘Alliance reiterates that it did not participate in, or profit from, any market sharing arrangement and refutes any involvement by the company or Mr Butterfield, who retains the full confidence and support of the board,’ it added. 

The company’s shares tumbled 13.37 per cent, or 12.5p, to 81p following the news. 

Aside from Butterfield, the CMA is also seeking CDOs against several other individuals connected to firms involved in the scandal including fellow Alliance Pharma director John Dawson and executives from Lexon UK, Focus Pharmaceuticals and Medreich. 

In total, seven company directors face disqualification as a result of the incident. The FTSE 100 rose 1.86 per cent, or 132.69 points, to 7281.19 while the FTSE 250 was up 1.94 per cent, or 359.48 points, at 18853.22. An end-of-week rally helped offset some of the losses in the market following Thursday’s declines, led by rebounds in shares initially caught up in the sell-off. 

Among these was investment firm Abrdn, which gained 7.45 per cent, or 10.55p, to 152.1p, while Rolls-Royce rose 5.27 per cent, or 3.76p, to 75.07p and miner Fresnillo added 5.5 per cent, or 36.2p, to 693.8p. 

Oil stocks received a boost as crude prices rebounded amid predictions the OPEC+ cartel will decide to cut production at a meeting next week. 

Brent crude was trading near $95 a barrel, lifting shares in BP 2.83 per cent, or 12.5p, to 453.70p while Shell was up 2.24 per cent, or 51p, at 2324p despite reports about the impending departure of its boss Ben van Beurden. The oil price rise lifted other energy stocks, with Harbour Energy, the North Sea’s biggest producer, rising 0.81 per cent, or 3.8p, to 473p. 

But the rally in the blue-chip index was tempered by the housebuilders, which slipped back after analysts at HSBC struck a pessimistic tone on the sector while downgrading companies across the board. The investment bank predicted demand for housing could fall by 20 per cent over the coming year, triggering a 7.5 per cent decline in house prices, with central London seeing a fall of double that. 

Analysts downgraded Barratt (down 1.23 per cent, or 5.1p, to 410.1p) and Persimmon (down 1.90 per cent, or 28p, to 1442p) to ‘hold’ from ‘buy’ while Berkeley (down 2.7 per cent, or 97p, to 3492p) was knocked to ‘reduce’ from ‘hold.’ 

Other firms had better luck among the brokers, with British Gas owner Centrica adding 2.43 per cent, or 1.86p, to 78.38p after analysts at RBC hiked their target price on the stock to 140p from 125p. 

Meanwhile, e-commerce group Zamaz made its debut on the London market, becoming only the second firm to list on the LSE through a direct listing, a process where a firm sells shares directly to the public rather than through intermediaries as is the case with an initial public offering (IPO). 

The stock ended its first session priced at 9.48p.