Tuesday 22 October 2019

Reckitt to pay $1.4bn over opioid treatment marketing

RB owns brands like Dettol. Photo: Reuters
RB owns brands like Dettol. Photo: Reuters
Concern: Opioid addiction is a major political issue across the Atlantic

Noor Zainab Hussain and Pushkala Aripaka

Reckitt Benckiser has agreed to pay up to $1.4bn (€1.2bn) to end US federal investigations into the marketing of an opioid addiction treatment by its former business Indivior, lifting a cloud that has been hanging over the British company for years.

While the settlement is significantly higher than the $400m that the consumer goods group had set aside to cover the cost of the investigations, analysts said it could allow its new chief executive to focus on a turnaround plan.

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Shares in Reckitt, whose products range from Mucinex cold medicine to Lysol cleaners, rose as much as 3.3pc yesterday. "As new CEO Laxman Narasimhan steps in (effective September 1), this clarifies the legal environment for RB and should allow the new management to focus on the RB 2.0 transformation," JP Morgan analysts wrote in a note.

In an effort to regain investor confidence after setbacks including a safety scandal in South Korea, a failed product launch and a cyber attack, 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.

But investors feared the US investigations could hinder the company's transformation.

"[The deal] gives the new CEO one less problem to worry about," Hargreaves Lansdown senior analyst Laith Khalaf said.

The settlement marks the largest payout by any drug company in what US president Donald Trump has called an epidemic of opioid addiction. The next largest was the $600m paid in 2007 by Purdue Pharma, maker of OxyContin.

Reuters

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