August 6, 2019 / 10:49 AM / 4 months ago

UPDATE 1-Mallinckrodt puts on hold generics spinoff as opioid litigation drags

(Adds background, details on second quarter)

Aug 6 (Reuters) - Drugmaker Mallinckrodt Plc said on Tuesday it has suspended plans to spin off its specialty generics business, citing increasing uncertainties tied to opioid litigation.

Mallinckrodt, like other pharmaceutical companies that make opioid drugs, is facing lawsuits that have alleged that it contributed to the addiction epidemic in the United States through its marketing and promotion practices.

The company has also struggled with falling prices for generic drugs.

Mallinckrodt in June tentatively agreed to pay $15.4 million to resolve a U.S. Justice Department probe into how a drugmaker it now owns marketed Acthar gel, its expensive treatment for a rare infant seizure disorder and multiple sclerosis.

Shares of the company have plunged nearly 60% this year.

Mallinckrodt had previously said it would spin off the generics unit and it would retain its constipation medicine Amitiza as part of its specialty branded drugs business.

The company said on Tuesday it would continue to consider a "range of options" to ultimately separate the generics business, consistent with its announced strategy.

Mallinckrodt also reported second quarter net income of $6.8 million, or 8 cents per share, down from $15.6 million, or 19 cents per share, a year earlier, due to an impairment charge.

The company said sales of Acthar fell 9.1% to $266.4 million, hurt by reimbursement challenges and insurer scrutiny of specialty pharmaceutical spending. (Reporting by Tamara Mathias in Bengaluru; Editing by Sriraj Kalluvila)

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