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Indivior PLC Annual Report and Notice of Annual General Meeting

31/03/2021 2:50pm

UK Regulatory (RNS & others)


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TIDMINDV

RNS Number : 1689U

Indivior PLC

31 March 2021

March 31, 2021

Indivior PLC (the 'Company')

Annual Report and Notice of Annual General Meeting

The Company has today posted or made available to shareholders the following documents:

   -      Annual Report and Accounts for the year ended December 31, 2020 (the '2020 Annual Report'); 
   -      Notice of 2021 Annual General Meeting ('AGM'); and 
   -      Form of Proxy for the AGM. 

In accordance with LR 9.6.1, a copy of each of these documents has been submitted to the FCA and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism .

The 2020 Annual Report and Notice of AGM can also be viewed on the Company's website at www.indivior.com/annual-reports/ and www.indivior.com/shareholders/shareholder-communications/ .

The Appendix to this announcement contains information which has been extracted from the 2020 Annual Report for purposes of compliance with the FCA's Disclosure Guidance and Transparency Rules and should be read together with the Company's Final Results announcement released on February 18, 2021. Together these constitute the material required by Disclosure Guidance and Transparency Rule 6.3.5 which is required to be communicated to the media in full unedited text through a Regulatory Information Service. This announcement is not a substitute for reading the full Annual Report and Accounts. Page numbers and cross references in the extracted information refer to page numbers and cross references in the 2020 Annual Report.

AGM meeting arrangements

The 2021 AGM will be held on Thursday 6 May 2021 at 3.00pm. Due to the current COVID-19 restrictions, the AGM will be held at the Company's offices with a limited number of Company representatives attending to ensure that a valid meeting is held. Other shareholders will not be permitted to attend the AGM in person and shareholders are therefore asked to appoint the Chair of the meeting as their proxy. Arrangements have been made to allow shareholders to join the meeting online, further details can be found in the Notice of Meeting. The Board understands that the AGM is an important event in the corporate calendar and is committed to returning to an open AGM format in future years when COVID-19 restrictions are eased.

Jason Thompson

Vice President, Investor Relations

Indivior PLC

Tel: +1 (804) 402 7123

jason.thompson@indivior.com

Forward-Looking Statements

The purpose of the Annual Report and Accounts is to provide information to members of the Company. The Annual Report and Accounts have been prepared for, and only for, the members of the Company, as a body, and no other persons. The Company, its Directors and employees, agents or advisors do not accept or assume responsibility to any other person to whom this document is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed.

The Annual Report and Accounts contains certain forward-looking statements with respect to the operations, performance and financial condition of the Group. By their nature, these statements involve uncertainty, since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of preparation of the Annual Report and Accounts and the Company undertakes no obligation to update these forward-looking statements. Nothing in this Annual Report and Accounts should be construed as a profit forecast.

APPIX - additional information required by DTR 6.3.5

The principal risks and uncertainties set out below are extracted from pages 38 to 45 of the 2020 Annual Report.

   i.          Principal risks and risk management 

Effective management of existing and emerging risks is critical to the success of our Group and the achievement of our strategic objectives. Risk must be accepted to a reasonable degree for our Group to execute on our strategic objectives and pursue our business opportunities in alignment with our mission. Risk management is therefore an integral component of our culture and governance.

The Board of Directors (Board) has carried out a robust assessment to ensure that the principal risks, including those that would threaten the Group's business model, future performance, solvency or liquidity, are effectively managed and/or mitigated to help ensure the Group remains viable. While the Group aims to identify and manage such risks, no risk management strategy can provide absolute assurance against loss.

The tables on pages 39 to 45 provide insight into the Group's principal risks, outlining why effective management of these risks is important, how we manage them, how the risks relate to the Group's strategic priorities, and which risks are increasing, decreasing or have remained static during the past twelve months. Additional risks, not listed here, that the Group cannot presently predict or does not believe to be equally significant, may also materially and adversely affect the Group's business, results of operations and financial condition. The principal risks and uncertainties are not listed in order of significance.

Managing risks

Our Enterprise Risk Management (ERM) process is designed to identify, assess, manage, report and monitor risks and opportunities that may impact the achievement of the Group's strategy and objectives. This includes adjusting the risk profile in line with the Group's risk tolerances to respond to new threats and opportunities. An effective ERM process is fundamental to our ability to meet and align to our operational and strategic objectives. The competitive market in which we operate has industry-specific risks, particularly those relating to new product development and commercialization, intellectual property enforcement and legal proceedings, and compliance with laws and regulations. This requires that existing and emerging business risks are effectively assessed, appropriately measured, regularly monitored, and addressed through mitigation plans. Our ERM process fosters and embeds a Group-wide culture of risk management that is responsive, forward-looking, consistent, and accountable.

Governance and responsibilities

The Board has overall responsibility for the Group's risk management. The Audit Committee assists the Board in overseeing the Group's risk management activities, including reviewing the Group's principal risks and emerging risks with a focus on key risk areas. In addition, the Board's Committees regularly review risks relevant to their area of focus; this includes, but is not limited to, risks relating to legal, financial, commercial, regulatory, and compliance matters.

The Executive Committee is required by the Board to oversee and monitor the effectiveness of the Group's risk management activities. Quarterly, the Executive Committee reviews enterprise risks as part of its regular quarterly business reviews, and assesses any changes impacting the Group, including emerging risks and impacts to Indivior's principal risks, as well as the underlying mitigating plans.

Business Unit and Functional Leadership executes day-to-day risk management activities, including risk identification, and manages risk mitigation actions within their respective areas in alignment with the ERM framework.

The Risk Management Team facilitates the ERM program, including the implementation of processes and tools to identify, assess, measure, monitor and report risks.

Any one or a combination of the risks listed below could impact the Group's viability (refer to our Viability Statement on page 46).

The emergence of the Coronavirus (COVID-19) pandemic and related government measures to address the pandemic have resulted in business pressures and disruptions across industries worldwide, and corresponding risks to the Group's business and operations. The COVID-19 pandemic has specifically heightened risks for four of our principal risks: business operations (refer to page 39); product pipeline, regulatory, and safety (refer to page 40); commercialization (refer to page 41); and supply (refer to page 42). Excluding the impact of the COVID-19 pandemic, risks for these four principal risks would have remained mostly unchanged compared to the prior year.

 
 1. Business Operations                                                                                                      Change from 2019 
 The Group's operations rely on complex processes                                                                                         Ý 
  and systems, strategic partnerships, as well 
  as specially qualified and high performing                                                                                             Increased 
  personnel to develop, manufacture and sell                                                                                            complexity 
  our products. Failure to continuously maintain                                                                                            and 
  operational and compliance processes and                                                                                              operational 
  systems as well as to retain and/or recruit                                                                                           challenges 
  qualified personnel could adversely impact                                                                                              due to 
  product availability and patient health,                                                                                                  the 
  and ultimately the Group's performance and                                                                                             COVID-19 
  financials. Additionally, an ever evolving                                                                                             pandemic, 
  regulatory, political, and technological                                                                                              significant 
  landscape requires that we have the right                                                                                               network 
  priorities, capabilities, and structures                                                                                                  of 
  in place to successfully execute on our business                                                                                      third-party 
  strategy and adapt to this changing environment.                                                                                       partners, 
  COVID-19 pandemic - The persistence of the                                                                                             impact on 
  COVID-19 pandemic and the ongoing government                                                                                              our 
  measures to address the pandemic continue                                                                                             operations 
  to create a very challenging business environment                                                                                       of the 
  for companies across industries worldwide                                                                                               Trade & 
  and therefore related risks to the Group's                                                                                            Cooperation 
  business and operations. In response to COVID-19,                                                                                      Agreement 
  the Group has established an agile cross-functional                                                                                     between 
  response structure; and implemented a number                                                                                           UK and EU 
  of mitigation and contingency actions to 
  help maintain the functioning of operations 
  across the organization, supply of all products 
  to our patients, and help ensure the welfare 
  of our employees. The Group continuously 
  monitors the potential impact on the health 
  and well being of our employees as well as 
  the workforce of our key third parties, which 
  ultimately may impact our operations. Furthermore, 
  given the remote working environment, the 
  Group continues to closely monitor cybersecurity 
  threats and the overall operating effectiveness 
  of the monitoring and control activities. 
  Given the evolving and dynamic nature of 
  the COVID-19 pandemic, and uncertainty surrounding 
  the duration of measures designed to mitigate 
  its spread, including the vaccination of 
  the population or attainment of herd immunity, 
  the impact on the Group's operations and 
  financial position is highly uncertain and 
  cannot be predicted with confidence. COVID-19 
  related developments are under constant review 
  to ensure our mitigation and contingency 
  actions are appropriate, proportionate, and 
  as effective as possible. However, despite 
  the measures the Group has taken, if the 
  pandemic adversely affects Indivior's operations 
  and/or performance, it will have a heightened 
  effect on many of the risks impacting the 
  Group, including its business operations 
  (refer to the other principal risks: product 
  pipeline and regulatory on page 40, commercialization 
  on page 41, and supply on page 42). 
  The manufacturing of our SUBOXONE and SUBUTEX 
  tablets for all of our European markets is 
  performed by a third-party contract manufacturer 
  located in the UK. The Group has been proactive 
  in taking appropriate actions since the Brexit 
  referendum, including changes to logistics, 
  shipping, and quality testing and release 
  processes, as well as transfer of regulatory 
  licenses and additional inventory builds. 
  While the UK and the European Union (EU) 
  signed the Trade and Cooperation Agreement 
  on December 24, 2020; certain operational 
  risks remain which may impact various areas 
  of the Group, including Operations, Regulatory, 
  Supply Chain, and Quality. The Group is closely 
  monitoring it. 
--------------------------------------------------------------------------------------------------------------------------  ----------------------- 
 Examples of risks                                             Management actions                                            Link to strategic 
                                                                                                                              priorities 
                                                                                                                             Grow SUBLOCADE to 
  *    Failure or significant performance issues experienced    *    An agile cross-functional response structure led by      $1bn+ net revenue, 
       with our key processes, Information Technology (IT)           Executive Management is in place                         diversify revenue, 
       systems, and/or at our critical third-party partners                                                                   build our pipeline 
       including due to the COVID-19 pandemic                                                                                 for future growth, 
                                                                *    Business operating standards, monitoring processes,      and optimize our 
                                                                     and contingency plans are in place                       operating model 
  *    Loss of intellectual property, confidential data, and 
       personally identifiable information or significant 
       impact on operations from cybersecurity breaches         *    IT policies, processes, systems, and disaster 
                                                                     recovery plans supporting overall business continuity 
                                                                     are in place 
  *    Failure to retain and recruit qualified workforce and 
       key talent 
                                                                *    Strategy, processes, and tools to secure systems and 
                                                                     protect data are deployed 
  *    Disruptions in our operations due to Brexit 
 
                                                                *    Talent management programs are in place, including 
                                                                     talent review and retention programs with focus on 
                                                                     identifying key roles and successors 
 
 
                                                                *    Operational and regulatory process changes were 
                                                                     implemented, and a Brexit steering committee 
                                                                     regularly monitors the impact of Brexit on our 
                                                                     operations and facilitates appropriate business 
                                                                     planning 
------------------------------------------------------------  ------------------------------------------------------------  ----------------------- 
 
 
 2. Product pipeline, regulatory and safety                                                                             Change from 2019 
 The development and approval of the Group's                                                                                         Ý 
  products is an inherently risky and lengthy 
  process requiring significant financial,                                                                                         Increased 
  research and development resources, and strategic                                                                                challenges 
  partnerships. Complex regulations with strict                                                                                        in 
  and high safety standards govern the development,                                                                                conducting 
  manufacturing, and distribution of our products.                                                                                  clinical 
  In addition, strong competition exists for                                                                                         trials 
  strategic collaboration, licensing arrangements,                                                                                 and/or CMC 
  and acquisition targets. Patient safety depends                                                                                  activities 
  on our ability to perform robust safety assessment                                                                                 due to 
  and interpretation to ensure that appropriate                                                                                     COVID-19 
  decisions are made regarding the benefit/risk                                                                                     pandemic 
  profiles of our products. Deviations from 
  these quality and safety practices could 
  impact patient safety and market access, 
  which can have a material effect on the Group's 
  performance and prospects. 
  COVID-19 pandemic - The COVID-19 pandemic 
  has negatively impacted our R&D operations, 
  specifically trial patient enrollments and 
  limited chemistry, manufacturing & controls 
  (CMC) operations, and therefore caused certain 
  delays in conducting clinical and/or CMC 
  studies internally and/or at our third-party 
  partners. 
---------------------------------------------------------------------------------------------------------------------  ---------------------- 
 Examples of risks                                          Management actions                                          Link to strategic 
                                                                                                                         priorities 
                                                                                                                        Grow SUBLOCADE to 
  *    Failure to advance the development and/or obtain      *    Product development, business development and         $1bn+ net revenue, 
       regulatory approval of pipeline products, as well          international growth strategies are in place          diversify revenue, 
 as                                                                                                                     and build our 
       failure to execute on business development                                                                       pipeline 
       opportunities                                         *    Due diligence, market valuation, and economic and     for future growth 
                                                                  financial modeling are in place 
 
  *    Potential liability and/or additional expenses 
       associated with ongoing regulatory obligations and    *    Ongoing Quality and Safety monitoring and auditing 
       oversight                                                  programs are in place 
 
 
  *    Unexpected changes to the benefit/risk profiles of    *    Strategies to defend against and pursue appropriate 
       our products                                               resolution of product liability claims are in place 
 
 
                                                             *    Rigorous pharmacovigilance processes for ongoing 
                                                                  evaluation of data collected from multiple sources 
                                                                  related to patient safety are in place, including 
                                                                  Risk Evaluation & Mitigation Strategy ("REMS") 
                                                                  programs in the US and Risk Management Plans (RMP) 
                                                                  outside the US 
---------------------------------------------------------  ----------------------------------------------------------  ---------------------- 
 
 
 3. Commercialization                                                                                                        Change from 2019 
 Successful commercialization of our products                                                                                               Ý 
  is a critical factor for the Group's sustained 
  growth and robust financial position. Launch                                                                                             Increased 
  of a new product involves substantial investment                                                                                        commercial 
  in marketing, market access and sales activities,                                                                                     challenges due 
  product stocks, and other investments. Certain                                                                                              to 
  factors, if different than anticipated, can                                                                                              COVID-19 
  significantly impact the Group's performance                                                                                             pandemic 
  and position. These factors include: HCP/Patient                                                                                       for SUBLOCADE 
  adoption and adherence; generic and brand                                                                                                   and 
  competition; pricing pressures; private and                                                                                           some government 
  government reimbursement schemes and systems;                                                                                             pricing 
  negotiations with payors; erosion and/or                                                                                                 pressure. 
  infringement of intellectual property (IP)                                                                                            (Refer to Chief 
  rights; and political and socioeconomic factors.                                                                                         Executive 
  COVID-19 pandemic - The pandemic has resulted                                                                                            Officer's 
  in overall fewer patient visits to healthcare                                                                                         review on pages 
  provider offices for non-COVID-19 reasons                                                                                             5 to 11 or the 
  or essential treatments, as patients become                                                                                              Financial 
  unable or unwilling to make visits due to                                                                                             Review section 
  overburdened healthcare systems or elect                                                                                                    on 
  to have remote consultations (telehealth)                                                                                             pages 29 to 32. 
  with their providers. As a result, in Q2 
  2020, the Group observed a rapid decline 
  in new US patient enrollments followed by 
  a modest improvement in Q3 compared to Q2, 
  and continued growth in Q4 compared to Q3. 
  The pandemic has also resulted in safety 
  concerns, quarantines, or other travel restrictions 
  for patients. Furthermore, even though the 
  Group has developed remote (digital) meeting 
  capability with healthcare providers, the 
  Group's commercial organization is still 
  only able to engage in-person with a limited 
  number of healthcare professionals (HCPs) 
  and Organized Health Systems (OHS). Although 
  COVID-19 has not significantly impacted the 
  Group's overall operating results and financial 
  position to date, a potential enduring and/or 
  significant decline in patient enrollments 
  and on the patient journey, and the inability 
  to effectively engage with HCPs and OHS would 
  have a negative impact on the Group's financial 
  results in future periods. 
  Governments across the world are considering 
  and taking actions to lower drug prices. 
  In the US, there is bi-partisan support for 
  drug pricing reforms at both federal and 
  state levels, which include potential legislative 
  and regulatory actions to encourage the import 
  of drugs, to price drugs according to a defined 
  international pricing reference, to encourage 
  more competition, and to undertake other 
  initiatives. These, together with federal 
  and state government fiscal constraints resulting 
  from the COVID-19 pandemic, which constrain 
  public benefit health programs, pose direct 
  and indirect downward pressure risk on drug 
  prices. The Group continues to monitor potential 
  legislative and regulatory changes and their 
  impacts, advocating for the Group's products 
  based on scientific studies and patient-centered 
  outcomes. However, certain potential legislative 
  and regulatory drug pricing changes could 
  have an adverse impact on the Group's financial 
  performance and results in the future. 
--------------------------------------------------------------------------------------------------------------------------  --------------------------- 
 Examples of risks                                             Management actions                                            Link to strategic 
                                                                                                                              priorities 
                                                                                                                             Grow SUBLOCADE to 
  *    Lower HCP adoption and patient enrollments of            *    Enhanced investments in OHS access, interactions with    $1bn+ net revenue, 
       SUBLOCADE, including the decrease linked to                   HCPs, including remote (digital) meeting capability,     and diversify revenue 
       limited/restricted patient visits and HCP                     as well as facilitation of patients' access and 
       interactions due to the COVID-19 pandemic                     reimbursement working with key stakeholders 
 
 
  *    Unexpected changes to government and/or commercial       *    Emphasizing value of products and health economics 
       reimbursement levels and government pricing pressures         tailored to commercial and government payors through 
                                                                     market access activities 
 
  *    Launch of competing branded and/or generic products 
                                                                *    Patient platforms supporting provider location, 
                                                                     reimbursement support, and co-pay assistance for 
  *    Competition and challenges in the product/geographic          eligible patients are in place 
       expansion outside the U.S. 
 
                                                                *    Ongoing training and development for field-based 
                                                                     employees are in place 
 
 
                                                                *    Monitoring of government and commercial pricing and 
                                                                     reimbursement related trends/measures and development 
                                                                     of mitigation strategies 
 
 
                                                                *    International growth, pipeline development, marketing 
                                                               , 
                                                                     and business development strategies are in place 
------------------------------------------------------------  ------------------------------------------------------------  --------------------------- 
 
 
 4. Economic and financial                                                                                                Change from 2019 
 The pharmaceutical business includes inherent                                                                                       Û 
  risks and uncertainties, requiring the Group 
  to make significant financial investments                                                                                            No 
  to develop and support the success of our                                                                                          change 
  product portfolio. Generating cash flow from 
  our approved products, together with external 
  financing, sustains our financial position, 
  allows development of new products, and funds 
  business growth. Realizing value on those 
  investments is dependent upon regulatory 
  approvals, market acceptance (including pricing 
  reimbursement levels), strategic partnerships, 
  competition, and legal developments. Unfavorable 
  outcome from resolutions of legal proceedings, 
  impacts from the COVID-19 pandemic, and/or 
  changes in government pricing regulations 
  could negatively impact our operating results 
  and financial position. Together with potential 
  pressure on our level of net working capital, 
  our ability to comply with our debt covenants 
  could be negatively impacted. As a global 
  business, we are also subject to political, 
  economic, and capital markets changes. 
-----------------------------------------------------------------------------------------------------------------------  ------------------ 
 Examples of risks                                             Management actions                                         Link to strategic 
                                                                                                                           priorities 
                                                                                                                          Grow SUBLOCADE to 
  *    Inability to raise capital, or execute on business       *    Realignment of cost and finance structures, and      $1bn+ net 
       development and alliance opportunities                        active expense management are in place               revenue, 
                                                                                                                          diversify 
                                                                                                                          revenue, 
  *    Failure to meet financial obligations and performance    *    Ongoing monitoring of financial performance and      build our 
                                                                     compliance with financial covenants                  pipeline 
                                                                                                                          for future 
                                                                                                                          growth, 
                                                                *    Strategies supporting expansion opportunities and    and optimize our 
                                                                     diversification are in place                         operating model 
 
 
                                                                *    Regular appraisals of debt and capital market 
                                                                     conditions with advisors and counterparties are in 
                                                                     place 
------------------------------------------------------------  ---------------------------------------------------------  ------------------ 
 
 
 5. Supply                                                                                                                  Change from 2019 
 The manufacturing and supply of our products                                                                                            Ý 
  are highly complex and rely on a combination 
  of internal manufacturing capabilities and                                                                                            Increased 
  third parties for the timely supply of our                                                                                           challenges 
  finished drug and combination drug products.                                                                                         throughout 
  The Group uses third parties, including contract                                                                                     the "supply 
  manufacturing organizations (CMOs), to manufacture,                                                                                  to patient" 
  package and distribute our products. The                                                                                               process 
  manufacturing of oral solid dose, film products                                                                                      due to the 
  and aseptically filled injectables is subject                                                                                         COVID-19 
  to stringent global regulatory, quality and                                                                                           pandemic, 
  safety standards, including Good Manufacturing                                                                                        including 
  Practice (GMP). Delays or interruptions in                                                                                            potential 
  our supply chain and/or product quality failures                                                                                       related 
  could significantly disrupt patient access,                                                                                          operational 
  adversely impact the Group's financial performance                                                                                   disruptions 
  and lead to product recalls and/or potential                                                                                           at our 
  regulatory actions against the Group along                                                                                              CMOs. 
  with potential reputational damages. 
  COVID-19 pandemic - The pandemic could adversely 
  impact our broad supply chain (i.e., "supply 
  to patient delivery" process) if we experience 
  a significant absence of our employees and/or 
  employees at our CMOs and vendors due to 
  infection and/or government containment measures. 
  Through on-going management and risk mitigation, 
  internally and with CMOs, the Group has not 
  experienced any significant COVID-19 related 
  disruptions to its supply to patient delivery 
  process through this date. 
-------------------------------------------------------------------------------------------------------------------------  ----------------------- 
 Examples of risks                                            Management actions                                            Link to strategic 
                                                                                                                             priorities 
                                                                                                                            Grow SUBLOCADE to 
  *    Reliance on critical CMOs and supply chain partners     *    Business continuity, disaster recovery, emergency        $1bn+ net revenue, 
                                                                    response plans, and enhanced communication protocols     and diversify revenue 
                                                                    across the supply chain network are in place 
  *    Inability to supply compliant finished products in a 
       continuous and timely manner due from operational 
       disruptions due to the COVID-19 pandemic                *    Contingency plans and management of safety stocks are 
                                                                    in place 
 
 
                                                               *    Comprehensive product quality and control processes 
                                                                    and manufacturing performance monitoring across the 
                                                                    supply chain network are in place 
 
 
                                                               *    Ongoing monitoring of stock levels and business 
                                                                    contingency planning 
-----------------------------------------------------------  ------------------------------------------------------------  ----------------------- 
 
 
 6. Legal and intellectual property                                                                                        Change from 2019 
 Our pharmaceutical operations, which include                                                                                             ß 
  controlled substances, are subject to a wide 
  range of laws and regulations. Perceived                                                                                              Decreased 
  or actual noncompliance with these applicable                                                                                           given 
  laws and regulations by a pharmaceutical                                                                                            the agreements 
  company can result in investigations or proceedings                                                                                    reached 
  leading to civil or criminal sanctions, fines                                                                                       with DOJ, OIG 
  and/or damages, as well as reputational damages.                                                                                         and 
  Intellectual Property (IP) rights protecting                                                                                         FTC resolved 
  our products may be challenged by external                                                                                               the 
  parties, including generic manufacturers.                                                                                              risk of 
  Although we have developed robust patent                                                                                              exclusion 
  protection for our products, we are exposed                                                                                            or other 
  to the risk that courts may decide that our                                                                                           potential 
  IP rights are invalid and/or that third parties                                                                                     federal civil 
  do not infringe our asserted IP rights.                                                                                                  and 
  In connection with the agreements to resolve                                                                                           criminal 
  criminal charges and civil complaints related                                                                                         penalties 
  to SUBOXONE Film (see Legal proceedings section                                                                                       associated 
  on page 33), the Group has specific requirements                                                                                         with 
  that are in addition to the Group's preexisting                                                                                      the matters 
  obligations to comply with applicable laws                                                                                             alleged 
  and regulations associated with its US pharmaceutical                                                                                   in the 
  operations. The Group is subject to penalties                                                                                        superseding 
  if it fails to fulfill the requirements within                                                                                       indictment, 
  the agreements.                                                                                                                          and 
  The Group is also a party to several civil                                                                                          being able to 
  lawsuits, including ongoing litigation in                                                                                              continue 
  the Federal FCA qui tam suits, and civil                                                                                            to participate 
  antitrust and state claims filed by various                                                                                               in 
  plaintiffs. Many of the civil claims concern                                                                                          US federal 
  the same conduct at issue in the Superseding                                                                                          healthcare 
  Indictment filed by the DOJ.                                                                                                          programs. 
  The Group is also a defendant in fewer than                                                                                            However, 
  400 civil lawsuits brought by various plaintiffs                                                                                       material 
  as part of the opioid class action litigation.                                                                                         business 
  These cases are at an early stage and are                                                                                            impact from 
  currently stayed.                                                                                                                     remaining 
  Unfavorable outcomes from resolutions of                                                                                                legal 
  these legal proceedings, could have a material                                                                                       proceedings 
  adverse impact on the Group's business, financial                                                                                    exist (refer 
  condition and/or operating results.                                                                                                       to 
                                                                                                                                          Legal 
                                                                                                                                       proceedings 
                                                                                                                                        section on 
                                                                                                                                          pages 
                                                                                                                                       33 to 36 and 
                                                                                                                                          Chair 
                                                                                                                                        and Chief 
                                                                                                                                        Executive 
                                                                                                                                         Officer 
                                                                                                                                        statements 
                                                                                                                                      on pages 5 and 
                                                                                                                                            11 
                                                                                                                                      respectively). 
------------------------------------------------------------------------------------------------------------------------  -------------------------- 
 Examples of risks                                             Management actions                                          Link to strategic 
                                                                                                                            priorities 
                                                                                                                           Grow SUBLOCADE to 
  *    Legal proceedings related to antitrust, state,           *    Quality, patient safety, monitoring and compliance     $1bn+ net revenue, 
       shareholders, product liability claims, government            are embedded in the Group's processes and culture      diversify revenue, 
       enforcement and/or private litigation associated with                                                                and build our pipeline 
       the manufacturing, marketing, and distribution of our                                                                for future growth 
       products                                                 *    Cooperation with the Government authorities in 
                                                                     connection with ongoing litigations, utilizing 
                                                                     internal and external counsel 
  *    Inability to obtain, maintain, and protect patents 
       and other proprietary rights 
                                                                *    Insurance coverage and monitoring activities are in 
                                                                     place 
 
 
                                                                *    Ongoing active review, management and enforcement o 
                                                               f 
                                                                     our product patents, marketing exclusivity and othe 
                                                               r 
                                                                     IP rights are in place 
 
 
                                                                *    Geographic expansion and product diversification 
                                                                     strategies are in place 
------------------------------------------------------------  ----------------------------------------------------------  -------------------------- 
 
 
 7. Compliance                                                                                                            Change from 2019 
 Our Group operates on a global basis and                                                                                                Û 
  the pharmaceutical industry is both highly 
  competitive and regulated. Complying with                                                                                           In connection 
  all applicable laws and regulations, including                                                                                          with 
  engaging in activities that are consistent                                                                                         the agreements 
  with legal and industry standards, and our                                                                                               to 
  Group's Code of Conduct are core to the Group's                                                                                        resolve 
  mission, culture, and practices. Failure                                                                                              criminal 
  to comply with applicable laws and regulations                                                                                        and civil 
  may subject the Group to civil, criminal                                                                                             complaints 
  and administrative liability, including the                                                                                          related to 
  imposition of substantial monetary penalties,                                                                                         SUBOXONE 
  fines, damages and restructuring the Group's                                                                                       Film, the group 
  operations through the imposition of compliance                                                                                     is subject to 
  or integrity obligations and have a potential                                                                                        heightened 
  adverse impact on the Group's prospects,                                                                                             compliance 
  reputation, results of operations and financial                                                                                     requirements 
  condition.                                                                                                                         and commitments 
  As part of the Group's resolution of federal                                                                                       (refer to Legal 
  criminal and civil charges related to its                                                                                            proceedings 
  legacy products (see Legal proceedings section                                                                                         section 
  on page 33), the Group has also entered into                                                                                        on page 33). 
  a Corporate Integrity Agreement (CIA) with                                                                                            However, 
  HHS-OIG. The five-year CIA requires, among                                                                                         to prepare and 
  other things, that the Group implement measures                                                                                        support 
  designed to ensure compliance with the statutes,                                                                                         the 
  regulations, and written directives of U.S.                                                                                        implementation 
  Medicare, U.S. Medicaid, and all other U.S.                                                                                           of these 
  Federal health care programs, as well as                                                                                             agreements, 
  with the statutes, regulations, and written                                                                                         the Group has 
  directives of the U.S. Food and Drug Administration.                                                                                  retained 
  Furthermore, the Group is subject to additional                                                                                      experienced 
  periodic reporting and monitoring requirements                                                                                       personnel. 
  related to the Agreements. In addition, the                                                                                          Further, as 
  CIA requires reviews by an independent review                                                                                          ongoing 
  organization, compliance-related certifications                                                                                     evolution of 
  from the Group's executives and certain Board                                                                                            the 
  members, and the implementation of a risk                                                                                              Group's 
  assessment and mitigation process. The CIA                                                                                           compliance 
  sets forth specified monetary penalties that                                                                                       journey and in 
  may be imposed on a per day basis for failure                                                                                       anticipation 
  to comply with the obligations specified                                                                                              of these 
  in the CIA. The CIA also includes specific                                                                                           agreements, 
  procedures under which the Group must notify                                                                                          a robust 
  HHS-OIG if it fails to meet the requirements                                                                                          strategic 
  under the CIA. In the event that HHS-OIG                                                                                           plan, advanced 
  determines the Group to be in material breach                                                                                       preparedness 
  of certain requirements of the CIA (including:                                                                                      efforts, and 
  repeated violations or any flagrant obligations                                                                                       external 
  under the CIA, a failure by the Group to                                                                                            and internal 
  report a reportable event and/or take corrective                                                                                      resources 
  action, a failure to engage and use an independent                                                                                    have been 
  review organization, a failure to respond                                                                                             deployed 
  to certain requests from HHS-OIG), the Group                                                                                       to develop and 
  may be subject to exclusion from participation                                                                                     operationalize 
  in the U.S. Federal health care programs,                                                                                           an effective 
  which would have a severe impact on the Group's                                                                                      compliance 
  ability to comply with the financial covenants                                                                                        program, 
  in the Group's debt facility, maintain sufficient                                                                                    including: 
  liquidity to fund its operations, pay off                                                                                             enhanced 
  its debt in 2022, generate future revenue                                                                                              written 
  and ultimately impact the Group's viability.                                                                                         standards; 
  The Resolution Agreement with the United                                                                                              training, 
  States Attorney's Office for the Western                                                                                            best practice 
  District of Virginia and Consumer Protection                                                                                          standards 
  Branch contains certain requirements, such                                                                                          for concerns 
  as reporting obligations and that the Group's                                                                                          "speak 
  CEO (a) certify on an annual basis that,                                                                                            up" reporting 
  to the best of the CEO's knowledge, after                                                                                                and 
  a reasonable inquiry, the Group was in compliance                                                                                     internal 
  with the Federal Food, Drug and Cosmetic                                                                                           investigations; 
  Act and has not committed health care fraud,                                                                                       crossfuntional 
  or (b) provide a list of all non-compliant                                                                                            oversight 
  activities and steps taken to remedy the                                                                                                with 
  activity. The FTC Stipulated Order contains                                                                                        certification; 
  specific notice and reporting requirements                                                                                         and monitoring 
  over a ten-year period related to certain                                                                                            activities. 
  activities (e.g., product switching conduct, 
  filing of a Citizen Petition). The Group 
  is subject to contempt prosecution if it 
  fails to comply with any terms of the resolution 
  agreement. 
-----------------------------------------------------------------------------------------------------------------------  --------------------------- 
 Examples of risks                                          Management actions                                            Link to strategic 
                                                                                                                           priorities 
                                                                                                                          Grow SUBLOCADE to 
  *    Failure to meet the requirements of the government    *    Oversight, monitoring and reporting of compliance        $1bn+ net revenue, 
       agreements (i.e., CIA, DOJ, and FTC)                       requirements with government agreements have been        diversify revenue, 
                                                                  implemented, including a management certification,       and build our pipeline 
                                                                  and defined sub-certification process                    for future growth 
  *    Non-compliance with our Code of Conduct, 
       anti-corruption, healthcare, data privacy, or loca 
 l                                                           *    Ongoing evolution of our compliance program and 
       laws and regulations                                       development of compliance capabilities, guided by 
                                                                  defined strategic plan and learnings from program 
                                                                  operations, are in place 
  *    Inability to adequately respond to changes in laws 
       and regulations, including data privacy 
                                                             *    Compliance policies and processes, including Code of 
                                                                  Conduct and risk assessment, and related mandatory 
  *    Failure to comply with payment and reporting               employee training programs are in place 
       obligations under the U.S. and foreign 
 
                                                             *    Confidential independent reporting process for 
                                                                  employees to report concerns is in place 
 
 
                                                             *    Oversight and monitoring of controls and procedures 
                                                                  in emerging markets are in place 
 
 
                                                             *    Data governance and management framework are in place 
 
 
                                                             *    Continuous review and assessment of developments in 
                                                                  the law, applicable industry standards, and business 
                                                                  practices are in place 
 
 
                                                             *    Ongoing monitoring of controls over government 
                                                                  pricing and reporting is in place 
---------------------------------------------------------  ------------------------------------------------------------  --------------------------- 
 

The statement of directors' responsibilities in respect of the financial statements is extracted from pages 113 to 114 of the 2020 Annual Report.

   ii.         Statement of directors' responsibilities in respect of the financial statements 

The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulation.

Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have prepared the Group financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. Additionally, the Financial Conduct Authority's Disclosure Guidance and Transparency Rules require the Directors to prepare the Group financial statements in accordance with international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and the Parent Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 Reduced Disclosure Framework, and applicable law, together "UK Accounting Standards"). Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Parent Company and of the profit or loss of the Group and Parent Company for that period. In preparing the financial statements, the Directors are required to:

> select suitable accounting policies and then apply them consistently;

> state whether international accounting standards in conformity with the requirements of the Companies Act 2006 and international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union have been followed for the Group financial statements and United Kingdom Accounting Standards, comprising FRS 101 have been followed for the Parent Company financial statements, subject to any material departures disclosed and explained in the financial statements;

> make judgments and accounting estimates that are reasonable and prudent; and

> prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Parent Company will continue in business.

The Directors are also responsible for safeguarding the assets of the Group and Parent Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's and Parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Parent Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006.

The Directors are responsible for the maintenance and integrity of the Parent Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' confirmations

The Directors consider that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group and Parent Company's position and performance, business model and strategy.

Each of the Directors, whose names and functions are listed in the Annual Report, confirm that, to the best of their knowledge:

> the Group financial statements, which have been prepared in accordance with international accounting standards in conformity with the requirements of Companies Act 2006 and international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union, give a true and fair view of the assets, liabilities, financial position and loss of the Group;

> the Parent Company financial statements, which have been prepared in accordance with United Kingdom Accounting Standards, comprising FRS 101, give a true and fair view of the assets, liabilities, financial position and loss of the Parent Company; and

> the Directors' Report includes a fair review of the development and performance of the business and the position of the Group and Parent Company, together with a description of the principal risks and uncertainties that it faces.

Disclosure of information to auditors

A Directors' statement in relation to disclosure of relevant audit information can be found in the Directors' Report on pages 109 to 112.

Going concern

The Group's business model, strategy, and viability assessment are set out in the Strategic Report on pages 2 to 47, along with the Group's risk management strategy and the principal risks that could threaten the Group's business model, future performance and solvency or liquidity. The Group's and Parent Company's financial position, cash flows, and liquidity position are discussed in the notes to the Group and Parent Company financial statements, along with the Group's and Parent Company's objectives, policies and processes for managing its financial risks, and the Group's and Parent Company's exposure to liquidity risk and capital risk.

The Directors have considered the Group's and Parent Company's financial plan, in particular with reference to the period through June 2022.

As disclosed in Notes 4, 21, 22 and 23 to the Group Financial Statements, the Group reached a resolution with the U.S. Department of Justice (DOJ), Federal Trade Commission (FTC) and the Department of Health and Human Services (HHS), which was approved in November 2020. The agreement reached with HHS (as described in Note 23) has eliminated the risk of potential exclusion from participating in US government health programs. Additionally, subsequent to the year-end, the Group resolved a claim raised by Reckitt Benckiser (RB) in November 2020. These settlements have resulted in liabilities totaling $536m as at December 31, 2020. While the uncertainty relating to these matters has been resolved, various other legal proceedings as discussed in Note 23 carry their own specific ongoing risk and uncertainty.

The Directors have assessed the Group's and Parent Company's ability to comply with the financial covenants in the Group's debt facility, maintain sufficient liquidity to fund its operations, fulfil obligations under the DOJ and RB agreements, and address the reasonably possible financial implications of the ongoing legal proceedings. The Directors have modeled the failure of SUBLOCADE to meet revenue growth expectations due to the continued impact from the COVID-19 pandemic (considering a 15% decline on forecasts) as part of the Group's and Parent Company's going concern assessment and downside scenario. The risk of a worse than expected outcome relating to the remaining ongoing legal matters has been considered for purposes of the viability period only as these cases are not expected to be concluded during the going concern period. Should the maximum reasonably possible risk occur (as disclosed in Note 23) in the going concern period, the Group and therefore also the Parent Company would still maintain adequate liquidity to comply with its financial covenants and obligations.

These risks were balanced against the Group's current and forecast working capital position, impact of the cost saving actions taken to date, and timing of the final balloon payment on the term loan in Q4 2022 which is outside the going concern assessment period and would also impact the Parent Company. As a result of the factors set out above, the Directors of the Group and Parent Company have a reasonable expectation that the Group and Parent Company have adequate resources to continue in operational existence for at least one year from the approval of these financial statements. Based on the above assessment, the previous material uncertainty relating to the Group's and Parent Company's ability to continue as a going concern has been removed.

The Directors have given the going concern assessment due consideration and have concluded that it is appropriate to adopt the going concern basis for accounting and preparing these financial statements. The viability statement is on pages 46 and 47.

Related party transactions are extracted from page 163 of the 2020 Annual Report.

   iii.       Related party transactions 

Key management compensation is disclosed in Note 7.

The subsidiaries included in the consolidated financial statements at December 31, 2020 are disclosed in Note 2 to the Parent Company financial statements.

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