KV Pharmaceutical Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of drug company KV Pharmaceutical (NYSE: KV-A  ) slipped as much as 19% on heavier-than-average volume.

So what: After a yo-yo performance during Friday's trading session that had KV's stock down as much as 14% before it recovered substantially, KV is back in the dumps. The stock may be the victim of a rash of bad headlines, most of which stem from the company's decision to jack up the price of Makena, a drug that helps prevent premature births, from $15 per dose to $1,500 per dose. In unrelated news, KV's former CEO was sentenced to 30 days in jail after pleading guilty to mislabeling drugs in 2008.

Now what: With regards to Makena, investors may claim that KV is simply doing what it's supposed to do in order to maximize its profits. That's capitalism after all, right? Unfortunately, that's a point that will fall on many deaf ears as outraged cries grow that KV is making huge profits on sick babies. Right or wrong, the perception of it is terrible for KV.

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Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.


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  • Report this Comment On March 14, 2011, at 5:06 PM, mkmar wrote:

    We have only seen the beginning of the backlash of the price gouging on Makena. Hopefully KV will understand this and reconsider their pricing. This stock will eventually be worthless otherwise as the lawsuits from price gouging causing increased stillbirths put them out of business next year

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