Report: Lannett could be first company bankrupted amid drug price scrutiny

LOS ANGELES — A new report from Citron Research is outlining why it expects Lannett to be the first pharmaceutical company to go bankrupt as a result of recent scrutiny on drug pricing. The analysis notes that Lannett is highly leveraged and dependent on three drugs for a bulk of its sales and that even modest price cuts to its biggest sellers would cause it to violate its debt covenants. 

 

The Citron report notes that four factors will influence the company’s solvency moving forward: competitors lowering their prices, the company being forced to eliminate its recent price increases, another generic introduced for Lannett’s top selling drug and a potential change in terms of its supply agreement for its top-seller.  

 

“Lannett will clearly fall under their own debt load as they encounter macro trends which they cannot escape,” the report said.