Shares in Hikma Pharmaceuticals PLC (LSE:HIK, OTC:HKMPF) rose then fell into the red after the company announced overnight that it has agreed a settlement to resolve its opioid-related claims in the US.
Under the agreement in principle, the FTSE 100-listed generic drug maker and its US subsidiary would pay up to US$115 million in cash and US$35 million in donations of naloxone, a treatment used to reverse the effects of opioid overdose, without any admission of guilt.
It said this would "resolve the vast majority of the opioid related cases" brought against the company by US states, communities and native American tribal nations that relate to the manufacture and sales of prescription opioid medications.
The company's legal council, Sam Park, said: "I am pleased that we have been able to reach a settlement framework agreement that works for all parties, while providing clarity to all of our stakeholders in regard to ending these pending matters."
Analysts at Stifel noted that Hikma was named in cases relating to the use of opioids for the treatment of pain, "like most, if not all, opioid manufacturers operating in the US".
For some companies, such as Teva, Purdue and Johnson & Johnson (NYSE:JNJ), which marketed leading opioid pain treatments, the cases involved multi-billion dollar settlements.
"Despite not being involved in the promotion of these products, as a generic manufacturer it could be argued that the company benefitted from the increased use of opioids in the US," they said.
"As a generic manufacturer, Hikma's exposure was seen as limited but the settlement resolves ongoing litigation reducing legal fees and to all intents and purposes draws a line under the issue."