Jan 18, 2017

Why pricing could make this drug company go bankrupt

Famous short-seller Andrew Left of Citron Research published a report Tuesday that predicted Lannett, a generic drug company that's one of the targets of a price-fixing investigation and other lawsuits, will be "the first pharma company to go bankrupt amid continuing drug pricing scrutiny."

If Lannett has to roll back its drug prices to where they were a few years ago, Left wrote, the drug maker will go belly up quickly because it will not generate enough cash to pay off its large debt load. Lannett is reliant on only a handful of its drugs, like thyroid medicine levothyroxine, for most of its business. A Lannett spokesman declined to comment.

Why it matters: Other drug companies that took on major debt to make deals, with the expectation of raising prices later, could find themselves in a similar situation. But this, of course, assumes Trump and Congress both agree to take on the drug industry.

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