Like many other companies with a long history, Mallinckrodt Pharmaceuticals has gone through ups and downs over decades of its operation. Mallinckrodt emerged as a small pharmaceutical firm that later developed into one of the largest drug manufacturers. At the same time, it was the company's impressive development and success that led to financial and legal issues later on.

In this article, we will go through the stages of Mallinckrodt’s growth, explore why its shares were removed from the New York Stock Exchange, and find out whether investing in it can still be profitable.

History of Mallinckrodt and its products

Mallinckrodt Pharmaceuticals is an American-Irish drug manufacturer. Most of the company’s operation is done in the US, while the company itself is headquartered in Ireland. Mallinckrodt specializes in drugs for autoimmune disorders of the nervous system and other diseases.

The history of the company dates back to 1867 when three Mallinckrodt brothers, Gustav, Otto, and Edward Sr., founded G. Mallinckrodt & Co. The firm served as a supplier of medicine for local pharmacies. Earlier, Emil Mallinckrodt, the father of the family, purchased a plot of land in St. Louis, Missouri, which became the site of the first Mallinckrodt factory.

Brothers Gustav and Otto died in the 1870s, leaving Edward the sole owner of the family business. In 1882, he established Mallinckrodt Chemical Works.

Mallinckrodt’s milestones and achievements:

  • 1884 – opens its first office in New York City.
  • 1889 – Mallinckrodt Chemical Works becomes the leading US producer of anhydrous ammonia, an important chemical used in the refrigeration industry.
  • 1898 – begins production of morphine and codeine, two chemicals that would play a key role in the history of pain relief.
  • 1913 – launches the production of barium sulfate, a key component used for x-rays.
  • 1924 – introduces iodeikon, the first x-ray contrast media used for gall bladder visualization.
  • 1960 – installs the first computer system for servicing Mallinckrodt customers.
  • 1962 – enters the market of antispasmodic and cardiovascular products.

In 1982, Mallinckrodt was acquired by Avon Products, an international cosmetics company. Four years later, IMC Global, a mining and production company, bought Mallinckrodt from Avon Products. In 2000, Mallinckrodt was acquired by Tyco International, a security systems producer. Only in 2013, Mallinckrodt became an independent company. Its main focus was on development, manufacturing, marketing, and distribution of specialty pharmaceutical products. The company’s revenue at that time totaled $2 billion.

Products:

  • Specialty Pharmaceuticals products include branded drugs, biologics, opioids, and specialty generics.
  • Medical Imaging products include radiopharmaceuticals for medical imaging and contrast agents.

Mallinckrodt also produces its own drugs as well as generics, a copy of a brand-name drug of other manufacturers.

What happened to Mallinckrodt’s stock?

The company went public in 1954, and its shares had been considered reliable for quite a long time. Mallinckrodt was included in the S&P 500. In 2015, the price of Mallinckrodt’s stock exceeded $130 but by November 20, 2020, it plunged to $0.065 per share.

Why Mallinckrodt’s stock lost its value:

  • In 2019, the US began to take steps to eradicate the growing opioid addiction among patients. The government cracked down on drug manufacturers who were allegedly interested in promoting such drug addiction. So, along with other producers, Mallinckrodt faced a series of lawsuits.
  • In 2020, Mallinckrodt struck a $1.6 billion deal to settle the lawsuit regarding the opioid crisis. The company will pay the settlement to different states in the next 8 years.
  • In 2019, terlipressin, the drug for supporting the liver, was not approved by the FDA which ruined the plans of Mallinckrodt.
  • In 2020, the company was sued for hiking the price of its drug, Acthar Gel. The compensation for the unfair pricing of the medicine amounted to $640 million.
  • In 2020, Mallinckrodt initiated Chapter 11 of the Bankruptcy Code. When the procedure is over, the company will continue to operate and will be exempt from some debts.

After the news that the company was going to file for bankruptcy, Mallinckrodt shares were removed from the NYSE. At the moment, MNKKQ is only available in the over-the-counter market.

In the past year, the price of Mallinckrodt’s shares has been hovering between $0.11 and $0.8.

Company’s earnings

In the third quarter of 2021, Mallinckrodt’s revenue amounted to $507.2 million, down by 27.4% from a year earlier. The net loss was $263.7 million, down by 237.6% from the same period last year. The financial state of the company was already bad in 2018-2020 when its net loss was around $996.5 million - $3.6 billion.

The diluted earnings per share (EPS) was $3.11.

The diluted EPS is used to calculate the reduced earnings per share, taking into account a possible change in the number of shares and a change in returns if all convertible securities were exercised.

How to profit from trading stocks

There are two ways to gain profit from stocks: you can either benefit from a price change or get dividends. As for Mallinckrodt, the company does not currently pay dividends. So the only way to earn here is to trade actively and monitor changes in the stock quotes.

CFD is a contract for difference in the value of an asset concluded between a buyer and a seller. A broker serves as an intermediary between the two parties. The key to success in CFD trading is to predict correctly whether the price of the share will rise or fall.

To start trading CFDs, you need to open a trading account with a broker such as InstaForex.

Benefits of trading CFDs with InstaForex:

  • affordable initial deposit
  • leverage
  • opportunity to earn on a falling market
  • trading with real-time quotes
  • wide choice of trading instruments
  • trading beyond opening hours of stock exchanges

To calculate your potential profit, use InstaForex Trader’s Calculator.

Conclusion

Despite huge debts, Mallinckrodt still has growth potential, experts believe. The company has some growth areas that can potentially bring it to a new level. For example, it boasts a wide array of manufactured drugs. Of course, the recovery of the company will be accompanied by financial and legal difficulties, but it is still possible if the company sharply reduces its costs.

Anyway, traders can profit both from falling and rising prices after estimating the prospects of the company. If you decide to earn on Mallinckrodt’s stock, go to the InstaForex website and register an account.