Makena Controversy Didn't Hurt KV -- Pharma Co.'s Stock Soared

Categories: Bidness

pregnant lady.jpg
Do investors want to see pregnant ladies get gouged? Apparently.
​There is no such thing as bad publicity.

That's the only conclusion we can reach upon hearing that even after getting pilloried in the national press for its attempt to charge pregnant women as much as $1,500 for a drug designed to prevent preterm labor, the stock at KV Pharmaceutical soared 130 percent last quarter.

Now, the stock surely rose during that time in part because the Bridgeton, Missouri, company had received FDA approval for exclusive rights to the drug, called Makena, on February 4. But it's worth nothing that KV announced its subsequent 100 percent mark-up in early March. The quarter ended March 31 -- which is right when the company was scrambling to handle widespread outrage over its ham-fisted money grab. If there was ever a time that principled investors might want to unload, or newbies might be worried about KV's judgment, you'd think that the last few weeks of March would be that time.

You'd be wrong.

On March 31, shares were trading at $5.94, up from $2.58 on December 31, 2010, according to the St. Louis Business Journal.

But here's what's really sad.

Just after the quarter ended, on April 1, KV announced that it was giving in (a bit), and reducing the price of Makena to the oh-so-affordable price of $690 per injection. While still ridiculously costly, that's a reduction of more than 50 percent from its originally announced price-point.

And so what happened April 1?

The company's stock plummeted, with shares falling as much as 11 percent that day, reports the financial web site The company's shares were trading at just around $4 per share at press time.

So what can we learn from this story? Apparently, America's investors are a lot more concerned about a company that bows to public pressure and tries to help women with high-risk pregnancies -- and a lot less concerned about big-pharm pirates trying to gouge the hell out of them. Comforting notion, that.

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Fal Birkley
Fal Birkley

The previous comment is correct: the author has no idea what she's talking about. K-V's shares PLUMMETED during the last three weeks of March 2011 after they announced the obscene price of $1500 per shot. (Note to author: that's a 10,000 percent markup, not a 100 percent markup.) Then K-V's share price went down even more after the FDA stepped in at the end of the month.

True, the stock price has not yet returned to its dismal Dec. 2010 level of just over $2 per share, but it's heading there fast. After the March pricing announcment, K-V fell from over $12 per share to about $6 by the end of March. Since the FDA announcment, the share price is down to $4.20.


Good Lord, you have almost every aspect of this story wrong. K-V's shares rose dramatically in early 2010 *before* their price-gouging announcement, since they were going to have the only FDA-approved form of progesterone. Once they announced the scandalous price in early March and started threatening compounding pharmacists, shares started down. Things got even worse for K-V at the end of March when the FDA announced they would not prosecute pharmacies who produced the drug on their own. K-V's pathetic price cut was damage control after the FDA announcement, when they were already toast. No one cared by that point; it was a classic case of "Too little, too late."


That's the Wall Street we've come to know -- and loathe!

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