Lannett will be first drugmaker to go bankrupt amid price scrutiny, short seller predicts

Andrew Left, a well-known short seller at Citron Research, predicts generic drug firm Lannett will be the first drugmaker to go bankrupt amid ongoing drug pricing scrutiny, according to a report released Tuesday.

In recent months, Philadelphia-based Lannett has been the target of a federal investigation on price-fixing, and the subject of several other lawsuits. These lawsuits, along with President-elect Donald Trump's call to lower drug prices, could spell out trouble for Lannett, according to Mr. Left.

"Lannett is heavily leveraged and extremely dependent on the profit windfall from just a few of its drugs to generate enough revenue to service its debt load," Mr. Left writes in the report.

If Lannett is forced to scale back drug prices, the drugmaker may not generate enough revenue to pay off its large debt load and could go bankrupt, according to the report.

While Mr. Left singled out Lannett as the first drugmaker to potentially go under, many other drug companies who have taken on major debt loads — with the expectation of raising prices later on — could also be at risk, according to Wednesday's Axios Vitals newsletter.

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