The generic drug industry has been hit hard by price collusion accusations. This has triggered searches of pharmaceutical firms by the U.S. Department of Justice Antitrust Division. The latest victim of investigation is Perrigo Company plc (NYSE:PRGO), where search warrants were issued in its corporate offices. However, the company did not reveal any details regarding the search, thus it is not known what was seized if anything.
It has been months now since the U.S. Department of Justice began the price-fixing investigations and it seems like they are not stopping anytime soon. However, the DOJ has not made any comments in regards to what the market should expect from the investigation activities.
Several companies have received subpoenas
The execution of search warrants on Perrigo may just be the tip of the iceberg. Or it could just be a warning of what is unfolding behind the scenes. Several companies have already been asked to provide information about their prices as well as their communications with their competitors. Those on target include Allergan plc Ordinary Shares (NYSE:AGN), Teva Pharmaceutical Industries Ltd (ADR)(NYSE:TEVA), and Endo International plc – Ordinary Shares (NASDAQ:ENDP) among others.
Nonetheless, Perrigo says, “The Company is taking this investigation seriously and is cooperating with the appropriate authorities.”
Courts set a high bar for price-collusion cases
Given the cases involving price-collusion, the courts have stepped up terms and conditions. Investigators must now produce among other things written evidence of an agreement that they will follow one another on prices.
Meanwhile, the Dublin-based Perrigo has been working towards increasing its sales without necessarily having to adjust prices. Nonetheless, it was also hit by the sudden exit of its chief financial officer who left earlier in the year. The company is now being urged to consider disposing of its generic-drugs business and refocus on over-the-counter cough and cold remedies.
In the meantime, Perrigo’s stock closed at $76.23 witnessing an increase of $2.18 or 2.94%.