Shares of Amneal Pharmaceuticals (NYSE:AMRX) fell over 36% today after the company announced a restructuring effort in light of continued weakness in the generic-drug markets. However, it will take some time to enact the plan. The company doesn't expect to achieve the majority of the milestones until 2020, and believes the annual cost savings goal of $50 million won't be fully realized until 2021.
The business also reduced full-year 2019 adjusted EBITDA guidance 28% from the previously announced midpoint, or from $625 million to $450 million. Management said it will revise the remaining financial metrics in its annual guidance when second-quarter 2019 operating results are announced on August 8.
As of 10:57 a.m. EDT, the stock had settled to a 33% loss.
Today's news is a punch to the gut because Amneal Pharmaceuticals and its peers have been furiously attempting to stave off disaster from souring market fundamentals. The business specifically cited fewer available customers and a greater-than-expected challenge from competitors as the core reasons for the lingering weakness in the generic-drug markets. Those headwinds have ensnared many generic-drug manufacturers and distributors in recent years, and if they're still blowing, it signals the industry's pain is far from over.
That likely explains why today's business update from Amneal Pharmaceuticals sent shares of peers tumbling as well. Mylan (NASDAQ:MYL) saw shares fall over 5%, while Teva Pharmaceuticals (NYSE:TEVA) saw shares fall over 4%. While the percentage decline of the two larger peers was smaller than that for Amneal Pharmaceuticals, all three businesses saw their market valuations decline by about the same amount, or over $600 million.
It could get even worse. A weak market for generic drugs isn't exactly the ideal environment for the industry to mount its defense against the 44 state attorneys general suing it for an alleged price-fixing scheme. Analysts estimate that the fines could be enormous -- measured in billions of dollars -- which is going to be all the more difficult to scrape up for the struggling group of companies.