Executive Summary / Key Takeaways

• Indivior PLC is strategically focusing its business and pipeline on opioid use disorder (OUD) treatments, leveraging its core asset, SUBLOCADE, and advancing promising Phase 2 candidates.
• First quarter 2025 results reflected expected headwinds, with total net revenue declining 6% year-over-year primarily due to intensified generic competition for SUBOXONE Film and the discontinuation of PERSERIS marketing.
• SUBLOCADE demonstrated resilience, with Q1 2025 revenue down a modest 2% year-over-year, driven by growth in the organized health system channel offsetting temporary funding challenges in the justice system. Management expects SUBLOCADE performance to improve in the second half of 2025.
• The company has implemented significant cost streamlining actions, targeting over $100 million in gross savings for 2025, with approximately $50 million reinvested in SUBLOCADE and the OUD pipeline, and over $50 million expected to benefit the bottom line.
• While 2025 is anticipated to be a transition year with expected declines in total revenue and operating profit due to Film erosion, management forecasts a return to company-wide growth in 2026, driven by market stabilization and LAI category expansion.

A Focused Future: Indivior's Strategic Pivot in the OUD Landscape

Indivior PLC stands at a pivotal juncture, strategically sharpening its focus on the opioid use disorder (OUD) treatment landscape. Born from a demerger, the company initially built its foundation on buprenorphine-based sublingual products like SUBOXONE Film and Tablet. Over time, its trajectory has been increasingly defined by the emergence of SUBLOCADE, a long-acting injectable (LAI) for OUD, which has become the primary engine driving its growth ambitions, targeting peak annual net revenue exceeding $1.5 billion. The portfolio expanded further with the acquisition of Opiant Pharmaceuticals, adding OPVEE, a nalmefene nasal spray for opioid overdose recovery, and a pipeline of OUD-focused assets.

This evolution has not been without significant challenges. Indivior has navigated complex and costly legacy litigation, including settlements related to the DOJ, antitrust claims, and ongoing opioid litigation. Concurrently, its established products face intense market pressures: SUBOXONE Film is grappling with aggressive generic competition, leading to pricing and market share erosion, particularly accelerating into 2025. While SUBLOCADE has shown robust growth, it faces competition in the burgeoning LAI market, alongside transitory headwinds such as fluctuations in Justice System funding and past impacts from events like Medicaid disenrollment. The launch of OPVEE has also encountered unexpected hurdles, including pushback from certain harm reduction advocates.

In response to this dynamic environment, Indivior has undertaken decisive strategic actions. The latter half of 2024 saw the implementation of significant streamlining efforts aimed at reducing costs by over $100 million annually. This was coupled with a critical reprioritization of its commercial and R&D pipeline, narrowing the focus exclusively to OUD treatments. This strategic refinement led to the discontinuation of the schizophrenia treatment PERSERIS and several pipeline candidates, allowing resources to be concentrated on high-potential OUD assets like INDV-6001 and INDV-2000. These actions are designed to fortify Indivior's position, fuel growth in its core OUD business, and enhance financial flexibility.

Technological Edge and Operational Investments

Central to Indivior's strategy and competitive positioning is its differentiated technology platform, particularly evident in SUBLOCADE. As a buprenorphine extended-release injection, SUBLOCADE offers a unique long-acting formulation designed to provide sustained therapeutic levels of medication over a month. This technology aims to improve patient adherence and outcomes compared to daily dosing regimens.

The company has actively sought to enhance SUBLOCADE's profile through clinical development and regulatory updates. A significant recent achievement was the FDA approval of label changes on February 24, 2025. These updates introduce a rapid initiation protocol, allowing healthcare providers to initiate treatment after a single dose of transmucosal buprenorphine and a one-hour observation period. The label also permits alternative injection sites (abdomen, thigh, buttock, or back of upper arm) and allows the second injection as early as one week after the first dose. These enhancements directly address feedback from healthcare providers and patients, aiming to improve the treatment experience and broaden accessibility. Management highlights that the rapid initiation on a monthly LAI is a key differentiator compared to the competitor's product, which only offers induction on its weekly formulation.

Beyond SUBLOCADE, Indivior's R&D pipeline is now exclusively focused on OUD. The company is advancing two Phase 2 assets: INDV-2000, a selective OREXIN-1 receptor antagonist, representing a potential non-opioid treatment option within the OUD continuum; and INDV-6001, a potential three-monthly long-acting buprenorphine injectable, aiming for a longer duration of action than existing LAIs. Phase 2 studies for both are underway, with the last patient last visit for INDV-2000 expected in the first half of 2026 (following a delay due to slower screening-to-enrollment conversion) and for INDV-6001 in Q4 2025. The stated goals for these programs are to address unmet needs through novel mechanisms (INDV-2000) and improved convenience (INDV-6001).

Operationally, Indivior is investing in its manufacturing capabilities to support future growth and potentially enhance cost efficiency. Capital expenditures in Q1 2025 were $5 million, primarily directed towards the expansion of the Raleigh Manufacturing Facility. The company anticipates total capital expenditures of $50 million to $70 million in 2025 for this project, with commercial production expected to begin in full year 2026 and savings materializing once fully ramped up in full year 2027. This investment underscores the company's commitment to scaling production for its key products.

The "so what" for investors is that these technological advancements and operational investments are intended to strengthen Indivior's competitive moat. SUBLOCADE's enhanced label could improve adoption by simplifying initiation and administration, potentially driving volume growth. The pipeline, while early stage, represents potential future revenue streams and further differentiation in the OUD market. Investments in manufacturing aim to support higher gross margins in the medium term as SUBLOCADE mix increases and production becomes more efficient.

Navigating a Complex Competitive Landscape

Indivior operates within a competitive landscape characterized by a mix of branded specialty pharmaceuticals, generics, and emerging alternative treatments for OUD and related conditions. Key publicly traded competitors include Alkermes (ALKS) with Vivitrol, Orexo AB (ORXOY) with Zubsolv, BioDelivery Sciences International (BDSI) with Bunavail, and generic manufacturers like Teva Pharmaceutical Industries (TEVA) offering buprenorphine generics.

In the long-acting injectable space, SUBLOCADE competes directly with Alkermes' Vivitrol (naltrexone) and Camurus' Brixadi (buprenorphine). While precise, directly comparable market share figures for all niche competitors are not publicly detailed, Indivior's management indicates that SUBLOCADE has maintained a strong position. In Q1 2025, SUBLOCADE's new patient share (excluding the justice system) averaged over 70% and has been stable for three quarters. Furthermore, cohort analysis of experienced dual prescribers shows SUBLOCADE maintaining approximately 65% share against its buprenorphine LAI competitor. Management attributes this stability to SUBLOCADE's unique product profile, particularly its efficacy across the entire monthly treatment interval, which they believe is the most important consideration for prescribers. While the competitor has gained some trial, the market appears to be stabilizing, with management expecting the share split among experienced dual LAI prescribers to settle around 65:35 favoring SUBLOCADE.

In the sublingual market, SUBOXONE Film faces intense pressure from multiple generic buprenorphine/naloxone film competitors. This has led to significant price erosion and market share decline. In Q1 2025, SUBOXONE Film's U.S. oral BMAT average share was 14.8%, down from 17.5% in Q1 2024. Management expects this trend of lower pricing and market share erosion to continue throughout 2025, driven by the existing four generic players and the potential entry of a fifth generic competitor.

OPVEE, Indivior's nalmefene nasal spray for overdose reversal, competes with established products like Narcan (naloxone) and potentially higher-dose naloxone products like Cluxado (licensed by Emergent BioSolutions (EBS)). Management highlights OPVEE's differentiation, being specifically recognized in its label for effectiveness against synthetic opioids like fentanyl, which are responsible for the vast majority of current overdoses. However, adoption has been slower than expected, partly due to pushback from certain harm reduction advocates citing concerns about precipitated withdrawal and a lack of real-world evidence. Indivior is actively generating real-world evidence through experience programs and studies to counter this.

Financially, comparing Indivior's TTM margins (Gross Profit Margin: 78.47%, Operating Profit Margin: 17.16%, Net Profit Margin: 0.24%) to selected competitors reveals variations reflecting different business models and market positions. Alkermes (ALKS) shows stronger margins (Gross ~84%, Operating ~27%, Net ~24%), indicative of its diversified specialty portfolio and potentially more favorable cost structure. Orexo (ORXOY) has higher gross margins (~88%) but negative operating and net margins, reflecting its R&D focus and smaller scale. Teva (TEVA), a large generic player, has significantly lower gross margins (~49%) but also negative operating and net margins, highlighting the challenges in the generic market and its broader portfolio issues. Indivior's margins sit between these extremes, reflecting the mix of higher-margin SUBLOCADE and lower-margin Film, coupled with significant operating expenses including legal costs.

Indivior's competitive advantages lie in its specialized focus on SUD, its proprietary LAI technology (SUBLOCADE's formulation and recent label enhancements), and its established presence and relationships within the OUD treatment community, particularly in organized health systems and the justice system. Its disadvantages include high dependence on SUBLOCADE for growth, vulnerability to generic erosion of its legacy products, and a cost structure that may be less efficient than larger, more diversified players or pure generic manufacturers. The company's strategy is to leverage its technological differentiation and market expertise to drive growth in the LAI segment and expand the overall LAI category, while managing the decline of its sublingual business and addressing the unique challenges for OPVEE adoption.

Financial Performance and Outlook

Indivior's financial performance in the first quarter of 2025 reflected the anticipated market dynamics and strategic adjustments. Total net revenue for the quarter was $266 million, a 6% decrease compared to $284 million in the first quarter of 2024. This decline was primarily driven by a 14% decrease in U.S. SUBOXONE Film revenue ($54 million vs. $63 million), impacted by intensified generic competition and lower pricing, and a 59% decrease in PERSERIS revenue ($4 million vs. $11 million) following the discontinuation of its marketing.

SUBLOCADE, the company's key growth driver, showed relative resilience, with total net revenue of $176 million, a modest 2% decrease from $179 million in Q1 2024. U.S. SUBLOCADE revenue specifically decreased by 3% to $163 million, as volume growth in the organized health system channel was more than offset by an expected volume decline from the justice system channel and unfavorable pricing/channel mix. Rest of World revenue increased by 3% to $44 million, with positive contributions from newer products partially offsetting generic erosion of the legacy tablet business.

Gross profit decreased by 10% to $221 million in Q1 2025, resulting in a gross margin of 83%, down from 87% in Q1 2024. This decrease primarily reflected the absence of favorable manufacturing variances related to SUBLOCADE production that occurred in the prior year period. Management expects gross margin to remain in the low-to-mid 80% range for the remainder of 2025.

Operating expenses decreased by 9% to $156 million. Selling, general and administrative expenses fell by 8% to $132 million, benefiting from streamlining actions and the discontinuation of PERSERIS marketing. Research and development expenses decreased by 19% to $22 million, reflecting the refocusing of the pipeline on Phase 2 OUD assets.

Operating income in Q1 2025 was $66 million, down from $75 million in the prior year period. Net income was $47 million, compared to $61 million in Q1 2024. The effective tax rate was 19% in Q1 2025, benefiting from U.K. innovation deductions and intragroup financing, partially offset by a U.K. global minimum top-up tax.

For the full year 2025, Indivior has provided guidance that reflects a transition year. Total net revenue is expected to be between $955 million and $1.025 billion. This anticipates a significant decline in U.S. SUBOXONE Film net revenue (expected to decrease by approximately 55% versus 2024) due to intensified generic competition, largely offsetting expected growth in other areas. SUBLOCADE net revenue is guided to be between $725 million and $765 million, suggesting relatively unchanged performance at the midpoint compared to the $756 million achieved in 2024. This outlook factors in continued growth in the OHS channel offset by near-term Justice System funding challenges. OPVEE net revenue is expected to be $10 million to $15 million, including an anticipated $8 million BARDA order. Rest of World revenue is expected to be generally flat.

Adjusted operating profit is guided to be in the range of $185 million to $225 million, reflecting the impact of lower Film revenue partially offset by cost streamlining benefits. SG&A expenses are projected between $525 million and $535 million, and R&D expenses between $85 million and $90 million, both reflecting the impact of streamlining and pipeline reprioritization. The effective tax rate is expected to be 22% to 25%.

Management expects SUBLOCADE's performance to improve in the second half of 2025 as commercial investments and the positive impact of the new label changes take hold. They also anticipate a return to growth in the Justice channel in 2026 as funding issues are addressed. Looking beyond 2025, the company forecasts a return to overall top-line growth, driven by market stabilization and continued expansion of the LAI category, which remains significantly underpenetrated relative to the estimated patient population that could benefit. OPVEE is also expected to become accretive in 2026.

Liquidity and Risk Profile

As of March 31, 2025, Indivior reported cash and cash equivalents of $372 million. While total current liabilities ($1,005 million) exceeded total current assets ($883 million) by $122 million, and total liabilities ($1,660 million) exceeded total assets ($1,375 million) by $285 million, the company believes its existing cash, investments, cash generated from operations, and debt facilities will be sufficient to meet anticipated cash needs for at least the next twelve months. Net cash provided by operating activities was strong in Q1 2025 at $75 million, benefiting from the timing of government rebate invoice receipts, although accrued rebates increased significantly, indicating potential cash outflow in subsequent quarters.

The company has a $350 million note purchase agreement maturing in November 2030, with an outstanding balance of $346 million at March 31, 2025, and an unused $50 million revolving credit facility. The company was in compliance with all debt covenants. Near-term capital allocation priorities are focused on reinvesting in the base business (SUBLOCADE), funding the pipeline, meeting litigation settlement obligations, and maintaining financial flexibility. Business development and returns of capital to shareholders are not currently being considered.

Key risks for Indivior include the intense generic competition for SUBOXONE Film, which is expected to continue eroding revenue and profitability. While SUBLOCADE has maintained market leadership in the LAI segment, competition from Brixadi could intensify, impacting market share and pricing. The Justice System funding challenges represent a near-term headwind for SUBLOCADE growth in that channel. OPVEE's adoption faces uncertainty due to pushback from harm reduction advocates, requiring significant effort to generate real-world evidence.

Legacy litigation remains a material risk, although the company has made progress in resolving matters. While a preliminary settlement for certain opioid litigation (including Opioid MDL municipalities/tribal nations) has been agreed upon for $78 million (NPV), this does not resolve private plaintiff cases (e.g., dental, NAS claims), which the company is vigorously defending. U.K. and U.S. shareholder claims and Opiant shareholder claims also remain ongoing, though motions to dismiss have been granted in some instances with potential for amended complaints.

Potential U.S. tariffs on pharmaceutical products and possible retaliatory tariffs from other countries pose a risk, though management believes the direct impact on their primarily U.S.-manufactured key products may be manageable, while acknowledging uncertainty regarding raw materials, intellectual property, and export markets. The Inflation Reduction Act also limits the company's ability to raise prices in the U.S. to offset potential cost increases, including tariffs.

Conclusion

Indivior PLC is navigating a period of strategic transition, marked by the anticipated significant decline of its legacy SUBOXONE Film business due to generic competition and the discontinuation of PERSERIS. The investment thesis is increasingly centered on the growth potential of SUBLOCADE, its differentiated technology, and the company's focused OUD pipeline. While Q1 2025 results reflected the expected headwinds, SUBLOCADE demonstrated underlying strength, and management's confirmation of full-year guidance signals confidence in their strategic adjustments and the expected improvement in SUBLOCADE performance in the latter half of the year.

The company's streamlining efforts are designed to protect profitability and fund reinvestment in its core growth drivers and future OUD innovations. Despite near-term challenges, particularly in the Justice System channel for SUBLOCADE and the adoption curve for OPVEE, the significant unmet need in the OUD market and the underpenetration of LAIs provide a compelling long-term growth opportunity. Investors should monitor the execution of the SUBLOCADE growth strategy, the progress of the Phase 2 pipeline assets, the resolution of remaining litigation, and the competitive dynamics in both the LAI and overdose reversal markets as key indicators of Indivior's ability to deliver on its mission and create shareholder value beyond the 2025 transition.