Why Mayne Pharma Ltd Group Ltd shares are surging today

Shares in global pharmaceutical business Mayne Pharma Group Ltd (ASX: MYX) have bolted around 7 percent higher to $1.54 this morning after the company provided a business update at an investment conference this morning.

Mayne Pharma recently acquired a portfolio of 42 drug products from U.S. pharmaceutical giants Teva and Allergan for $652 million, although its share price has been volatile after news broke of a U.S. regulatory investigation into the marketing, sales, and pricing of drug products in the U.S. market.

Worryingly for investors the company has been subpoenaed by the U.S. Department of Justice (DOJ) to provide information over the sale of some of its drug products and it’s no surprise the shares were under selling pressure last week given the DOJ’s broad powers and fearsome reputation.

Mayne Pharma stated that it believes the investigations will not have a “material” impact on earnings, although it added the disclaimer that no assurance can be given as to the outcome of the investigation.

The stock is likely to trade sideways until the uncertainty around the DOJ’s investigation is lifted, even though Mayne Pharma boasts an attractive product portfolio in the world’s most lucrative healthcare market.

Investors looking for healthcare stocks sold down in the wake of U.S. election jitters may be better off looking at liver cancer specialist Sirtex Medical Limited (ASX: SRX) or hospital equipment provider Nanosonics Ltd (ASX: NAN).

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Motley Fool contributor Tom Richardson has no position in any stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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