Citron turns spotlight on Mallinckrodt, shares plunge

Mon Nov 9, 2015 7:16pm EST
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(Reuters) - Shares of Mallinckrodt Plc (MNK.N: Quote) closed down 17 percent after short-seller Citron Research called the drugmaker "a far worse offender of the reimbursement system" in a tweet.

Earlier in October, Citron had accused Canadian drugmaker Valeant Pharmaceuticals International Inc (VRX.TO: Quote) (VRX.N: Quote) of using specialty pharmacies to inflate revenue.

"The market has been so focused on Valeant that they forgot about other platform companies, which are levered and face the same headwinds in reimbursement," Citron's Andrew Left said in an email.

Shares of Valeant are down more than 40 percent since the short seller published its report on the company on Oct. 21.

Specialty pharmacies are designed to handle complex medications such as cancer drugs, which require careful handling, storage and distribution.

However, Valeant has used such pharmacies to sell more conventional medicines directly to patients to get past limits on a drug's use imposed by insurers or retail pharmacies.

Citron indicated that it would disclose more in a report on Mallinckrodt, but did not say when it would be published. (

Mallinckrodt, which has a market value of $8.2 billion, makes specialty drugs, medical imaging agents and generic drugs.

Hedge funds Paulson & Co Inc and Janus Capital Management LLC are two of Mallinckrodt's biggest shareholders, with a stake of 5.62 percent and 5.43 percent, respectively, according to Thomson Reuters data.   Continued...