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id: 814, Created by Stan Vick, Scout
FMC Corporation (FMC) Blue Orca Reveal Case
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- Blue Orca alleged FMC of misleading investors about generic competition for its flagship diamides.
- $FMC fell by 8% and lost over $700 million of its market capitalization, damaging shareholders.
- Investors may have reasons to suspect FMC of misleading and concealing important information.
On September 7, 2023, short-seller Blue Orca issued a report about FMC Corporation alleging that the Company "concealed from investors that it has suffered a recent string of stunning legal defeats around the globe that have enabled competitors to now launch competing generics at prices up to 80% below the price of FMC’s flagship insecticide product. Contrary to the Company’s claims, FMC’s process patents do not protect its flagship product from generic competition."
On this news, $FMC fell nearly 8% and lost over $700 million of its market capitalization, damaging investors.
In Blue Orca's opinion, "FMC continues to misrepresent to investors that it will not face generic competition for its flagship diamides.
- Generics have already launched in key markets of India and China and are on the precipice of launching in Brazil.
- Our investigation found dozens of legal competitors, many industry heavyweights, who are, right now, manufacturing and selling generic versions of FMC’s top-selling insecticide product in FMC’s most important markets at much lower prices.
- In China, competitors are selling generics for up to 80% below the price of FMC’s branded equivalent.
- In FMC’s key market of India, the Delhi High Court recently found FMC guilty of misleading the court and the patent office, and well-capitalized competitors have now launched generic versions of FMC’s top-selling CTPR product at cut prices and are already projected to take 40-50% of FMC’s CTPR diamide market share in India in the next year."
- Given that FMC’s patented diamides account for an estimated 60%+ of EBITDA, Blue Orca "expects that a tidal wave of generic competition on FMC’s flagship product will crush FMC’s revenues and profits while blowing out its leverage covenants."
Earlier, on July 10, 2023, FMC Corporation, despite raising its full-year revenue guidance in May 2023, announced that it was cutting its revenue for the second quarter and the 2023 fiscal year. It announced that "the revised guidance is driven by substantially lower-than-expected volumes due to an abrupt and significant reduction in inventory by channel partners, which only became evident towards the end of May and continued through the remainder of the quarter". On this news, $FMC fell by 11%.
Taking the reported facts into account, investors may have reasons to suspect FMC of misleading and concealing important information from shareholders.
Failure to Disclose,
Shock Event Date
07 September 2023