Products produced by Reckitt Benckiser; Vanish, Finish, Dettol and Harpic, are seen in London, Britain. File photo/Reuters
Britain’s Reckitt Benckiser will pay up to $1.4 billion to resolve all US federal investigations into the sales and marketing of an opioid addiction treatment by its former prescription pharmaceuticals business Indivior.
The settlement means the British consumer goods giant will have to raise the amount of money it has set aside to cover the cost of the investigations to $1.5 billion, from an earlier provision of $400 million, the company said on Thursday.
Reckitt Benckiser (RB) said it had reached agreements with the US Department of Justice (DOJ) and the Federal Trade Commission (FTC) to resolve the investigation into a business that was wholly demerged from the company in 2014.
The US Justice Department had accused Indivior of illegally boosting prescriptions for the opioid addiction treatment, called Suboxone Film.
Separately on Thursday, Indivior raised its full-year profit and revenue guidance after Suboxone lost market share at a lower pace than expected, bolstering its first-half performance.
“While RB has acted lawfully at all times and expressly denies all allegations that it engaged in any wrongful conduct, after careful consideration, the board of RB determined that the agreement is in the best interests of the company and its shareholders,” the company said in a statement.
It said the agreement avoided the costs, uncertainty and distraction associated with continued investigations, litigation and the potential for an indictment at a time of significant change for the company, which is undergoing a restructuring plan and handing over to a new chief executive.
“$1.4bn is materially larger than the $400m RB had previously provisioned and represents c2% of its market cap. On the other hand this settlement removes some uncertainty from the investment case,” Credit Suisse analyst Alan Erskine said.
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.
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.
RB said the settlement would be funded through existing borrowing facilities and cash generation.