Naloxone, a medication used to treat opioid overdose. Photo: Bernard Weil/Toronto Star via Getty Images
Equity analysts at UBS downgraded pharmaceutical companies Teva and Mylan significantly on Tuesday, highlighting pending litigation and an "unclear path to upside."
Driving the news: Teva on Sunday agreed to pay $85 million to settle claims with the attorney general of Oklahoma for its role in the opioid crisis.
- Teva's stock price fell more than 12% to a 19-year low following the downgrade as the lawsuit, which alleges Teva joined with other companies as part of a generic drug price fixing racket, continued to hammer the company.
- Mylan's stock fell nearly 6%. The two pharmaceutical companies are the biggest manufacturers of generic drugs.
The backdrop: Generic drugmakers were hit by a price-fixing lawsuit this month, filed by 44 states alleging 20 corporate defendants conspired to fix prices of more than 100 generic drugs, raising prices by more than 1,000%.
The big picture: UBS analyst Navin Jacob, who downgraded his price target on Teva to $12 from $22, said in a note that the generic drugs and opioid lawsuit open the company up to a potential $4.1 billion in damages.
- Mylan shares have tumbled nearly 20% since the lawsuit was announced earlier this month, and Teva's stock has fallen by around 33%.