Drug manufacturer shifts operations from London to the United States
London Stock Exchange Takes Another Hit: Indivior Leaves for the US
Monday saw another setback for the London Stock Exchange (LSE) as drug maker Indivior announced plans to abandon its London listing and focus on its primary listing in the US. The company cited reasons such as liquidity, shareholder location, and the red tape associated with the LSE for its decision.
Over the past few years, numerous companies have bid adieu to the UK capital's exchange. In fact, 88 companies left last year, with Darktrace and Paddy Power-owner Flutter being among them. Even hopes for a blockbuster Shein IPO were shattered last week, as speculations of the Chinese fashion giant eyeing a move to Hong Kong emerged.
Invidior, boasting a market cap of over £1bn and employing more than 1,000 people worldwide, revealed that liquidity on Nasdaq far outweighed that on the LSE. As a result, over 75% of its trading volume was attributed to the New York exchange by late May.
Shares have fallen by over a third in the past twelve months. AJ Bell's investment director, Russ Mould, expressed his concerns, stating, "The London Stock Exchange will be upset it is losing another big name. It's another headwind for the exchange operator in trying to reinvigorate the UK stock market, and means the pressure is on to attract new names to the market and keep existing ones."
Invidior's Chairman, David Wheadon, expressed his satisfaction with the move, stating, "A single primary listing on Nasdaq best reflects the profile of Indivior's business." He added that shareholders had provided support for the initiative, looking forward to reaping market benefits, including cost reductions and complexity.
Competition Pressure
Invidior has faced intense competition and inflation in the opioid treatment market in recent years. A profit warning issued in July 2020, which caused shares to drop by more than 30%, underscores this pressure.
The pharmaceutical industry, including the stock exchanges, has been disrupted by Donald Trump's tariff announcements. Following news of a UK-US trade agreement, Invidior stated that it would help "secure the multinational supply chain" supporting the continued manufacture of pharmaceutical products in the US. "This agreement allows Indivior to continue its work to make America healthy again, for a future of recovery from the opioid crisis in the US and around the world, with products made in America."
Incorporating foreign insights, it appears that companies like Indivior, with a large U.S.-based shareholder base (over 70%) and significant revenue generation from the US (more than 80%), find it beneficial to align their stock listings with their core business markets. Additionally, the deeper and more liquid markets in the US, offering better trading conditions and investor engagement, contribute to the decision to prioritize US listings.
In light of Indivior's decision to prioritize its listing in the US, it seems that companies with a substantial U.S.-based shareholder base and significant revenue generation from the US find the deeper and more liquid markets in America more advantageous for better trading conditions and investor engagement. Furthermore, the pharmaceutical industry, including stock exchanges, may experience increased competition and pressure, particularly in markets like the opioid treatment industry, leading some companies to move to other exchanges for better liquidity and market benefits.
