Shares in Mayne Pharma Group (MAYNF) plunged as much as 24% on Friday after several U.S. states filed a lawsuit alleging the Australian pharmaceutical firm had engaged in a conspiracy with others to fix prices on two generic drugs.
Twenty U.S. states filed the lawsuit on Thursday and named, apart from Mayne Pharma, Mylan NV (MYL), Teva Pharmaceuticals (TEVA), Heritage Pharmaceuticals, Aurobindo Pharma, and Citron Pharma LLC. They alleged company executives had propped up prices of the generic versions of the antibiotic doxycycline hyclate and diabetes medicine glyburide.
“Beginning as early as 2013, defendants Heritage, Mylan, and Mayne knowingly agreed to allocate and divide the market for the generic drug Doxy DR,” the U.S. Department of Justice (DOJ) said in a filing on Thursday.
The lawsuit is one piece of a broader generic drug pricing probe under way in the United States. It has grown over the past two years to include multiple drugs and companies, some of which have said they are being investigated by the DOJ.
While the lawsuit exposes affected companies to potential financial penalties, Mayne Pharma said in a statement to the Australian Stock Exchange on Friday that its board “continues to believe the investigation and the legal proceedings will not have a material impact on its future earnings.”
It did not say whether it intended to fight the lawsuit. A spokeswoman for Mayne Pharma did not return calls.
Mylan and Teva have denied the charges, while Heritage – part of India’s Emcure Pharmaceuticals – has blamed former executives for fixing prices and said those employees had been terminated. The other companies named in the suit had no immediate comment.
Shares in Mayne Pharma – which had a market capitalization of A$2.14 billion ($1.58 billion) as of Thursday – slid to a 10-month low of A$1.08 earlier on Friday, but recovered slightly to trade down about 11% at A$1.28 by 0451 GMT.
“Mayne Pharma is a very retail-driven stock. As we have seen many times with biotech, when there is even a hint of problem, people will exit the stock quite dramatically,” said Chris Kallos, equities analyst at Morningstar.