Reckitt Benckiser's lucrative legacy pharmaceuticals business is under threat after two manufacturers received approval to produce cheap, copycat generics of its heroin replacement tablets.
The group, best known for its household cleaning brands such as Dettol and Finish, still makes more than 20% of its operating profit from its drugs business, which enjoyed enormous success after its suboxone tablet became a preferred treatment for heroin addiction in America.
Reckitt lost exclusive marketing rights for suboxone in October 2009 and has warned that more than 80% of profits from the drugs could be wiped out should a low-cost alternative be produced. Shares dropped 4%, to £43.42, on news those fears could now be realised.
Reckitt has also been scuppered in its attempts to have the suboxone tablets outlawed by the US regulator. The company presented the US Food and Drug Administration (FDA) with research showing the tablets were more likely to be accidentally taken by young children than alternative treatments, as it prepared to face competition from generic drug suppliers.
At the time, Reckitt voluntarily stopped selling the tablets and said it would encourage American doctors to migrate recovering heroin addicts on to another, newer Reckitt product, which retains its patent.
Reckitt said the alternative – which delivers the same suboxone drug via an under-the-tongue film – was "child-resistant", in part because of its packaging, which allows access to just one dose at a time.
But the FDA has ruled that the safety data presented by Reckitt did not warrant more stringent packaging standards and said existing labelling and safety programmes were sufficient.
Reckitt said on Monday it was "disappointed with the decision but will continue to work with the FDA on safety enhancements". It said it remained "committed to maintaining its own high level standards for safety", including the use of child-resistant packaging for the heroin replacement drug. It will not therefore reintroduce the loose tablet bottles of suboxone in the US.
The company noted on Monday that two unnamed manufacturers have received approval to produce generic suboxone tablets. It added: "The details of these manufacturers' proposed safety programmes have not been provided."