IZQVF Indivior PLC (PK)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 20-F

OR

OR

OR

Date of event requiring this shell company report

Commission file number:

Copies to:

Eric W. Blanchard

Covington & Burling LLP

The New York Times Building

620 Eighth Avenue

New York, NY 10018

Tel: +1 212 841 1000

Securities registered or to be registered pursuant to Section 12(b) of the Act:

(1)Not for trading, but only in connection with the listing of the American Depositary Shares

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Number of outstanding shares of each of the issuer’s classes of capital or common stock as of June 30, 2016:

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

o  Yes   x  No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

o  Yes   o  No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

o  Yes   x  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

o  Yes   o  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

o  Item 17   o  Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o  Yes   o  No

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INTRODUCTION

We are a global specialty pharmaceutical business and are currently the global leader in the treatment of opioid dependence, with 20 years’ experience in that field. Our core products, which are currently sold in 42 countries, comprise SUBOXONE ® Film (buprenorphine and naloxone sublingual film), SUBOXONE ®  Tablet (buprenorphine and naloxone sublingual tablets), and SUBUTEX ®  Tablet (buprenorphine sublingual tablets), all of which are treatments for opioid dependence.

We were incorporated as a public limited company under the laws of England and Wales on September 26, 2014.

Our business was historically developed and managed as a separate division of Reckitt Benckiser Group PLC (“RB” and, together with its subsidiaries, the “RB Group”), a public limited company incorporated under the laws of England and Wales.

Indivior PLC was incorporated for the purpose of acquiring the specialty pharmaceutical business unit (the “Pharmaceutical Business”) from RB as part of the demerger, which became effective on December 23, 2014 (the “Demerger”). Following the Demerger, Indivior PLC has operated as a standalone business. For more information regarding arrangements between Indivior and RB subsequent to the Demerger, see “Item 10.C. Material Contracts — Transitional Services Agreement.”

Our ordinary shares are listed on the premium listing segment of the Official List of the UK Financial Conduct Authority (the “Official List”) and traded on the Main Market of the London Stock Exchange. We are filing this registration statement on Form 20-F in anticipation of the listing of our American Depositary Shares (the “ADSs”) on [ · ] under the symbol “[ · ].” JPMorgan Chase Bank, N.A., acting as depositary, will register and deliver our ADSs, each of which will represent 5 of our ordinary shares.

ABOUT THIS REGISTRATION STATEMENT

As used herein, references to “we,” “us,” the “Company,” “Indivior,” “Indivior PLC,” “Indivior Group” or the “Group,” or similar terms in this Form 20-F mean Indivior PLC and, as the context requires, its subsidiaries.

SUBOXONE ® Film, SUBOXONE ® Tablet, SUBUTEX ®  Tablet, TEMGESIC ®  and BUPRENEX ®  are our trademarks. Any other trademarks and trade names appearing in this registration statement on Form 20-F are owned by their respective holders.

In this registration statement, all references to “U.S. dollars” or “US$” or “cents” are to the currency of the United States of America, and all references to “pounds Sterling” or “Sterling” or “GB£” or “£” or “pence” are to the currency of the United Kingdom.

Statements made in this registration statement on Form 20-F concerning the contents of any contract, agreement or other document are summaries of such contracts, agreements or documents and are not complete descriptions of all of their terms. If we filed any of these documents as an exhibit to this registration statement or to any registration statement or annual report that we previously filed, you may read the document itself for a complete description of its terms.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this document, including those in “Item 3.D. Risk Factors,” “Item 4.B. Business Overview” and “Item 5. Operating and Financial Review and Prospects” constitute “forward-looking statements.” In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “forecasts,” “plans,” “prepares,” “anticipates,” “expects,” “intends,” “may,” “will” or “should” or, in each case, their negative or other variations or comparable terminology although these are not exclusive means of identifying such statements.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

The forward-looking statements in this document are made based upon our current expectations and beliefs concerning future events impacting us and therefore involve a number of known and unknown risks and uncertainties. Such forward-looking statements are based on numerous assumptions regarding our present and future business strategy and the environment in which we operate, which may prove to be inaccurate. These forward-looking statements are not guarantees of future performance and actual results could differ materially from those expressed or implied in these forward-looking statements.

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In particular, our expectations could be affected by, among other things:

·                                           our ability to protect our patents and other intellectual property, including in connection with pending litigation;

·                                           factors affecting sales of SUBOXONE ®  Film, SUBOXONE ®  Tablet, SUBUTEX ®  Tablet and our other products outside of the United States;

·                                           the outcome of research and development activities including, without limitation, the ability to meet anticipated clinical trial commencement and completion dates, regulatory submission and approval dates, in particular with respect to RBP-6000, many of which are outside our control and are difficult to predict, and launch dates for product candidates, as well as the possibility of unfavorable clinical trial results, including unfavorable new clinical data and additional analyses of existing clinical data;

·                                           decisions by regulatory authorities regarding whether and when to approve our drug applications, in particular with respect to RBP-6000, as well as their decisions regarding labelling, ingredients and other matters that could affect the availability or commercial potential of our products;

·                                           the speed with which regulatory authorizations, pricing approvals and product launches may be achieved;

·                                           the outcome of post-approval clinical trials, which could result in the loss of marketing approval for a product or changes in the labelling for, and/or increased or new concerns about the safety or efficacy of, a product that could affect its availability or commercial potential;

·                                           competitive developments, including the impact of new product entrants, in-line branded products, generic products, private label products and product candidates that treat diseases and conditions similar to those treated by our products and product candidates;

·                                           difficulties or delays in manufacturing;

·                                           the impact of existing and future legislation and regulatory provisions on product exclusivity;

·                                           trends toward managed care and healthcare cost containment;

·                                           legislation or regulatory action affecting pharmaceutical product pricing, reimbursement or access;

·                                           claims and concerns that may arise regarding the safety or efficacy of our products and product candidates;

·                                           governmental laws and regulations, including those affecting pharmaceutical product pricing, reimbursement or access, as well as our U.S. and foreign operations, including, without limitation, tax obligations and changes affecting the tax treatment by the United States of income earned outside the United States that may result from pending and possible future proposals;

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·                                           any significant issues that may arise related to the outsourcing of certain operational and staff functions to third parties, including with regard to quality, timeliness and compliance with applicable legal requirements and industry standards; and

·                                           uncertainties related to general economic, political, business, industry, regulatory and market conditions including, without limitation, uncertainties related to the impact on us, our customers, suppliers and other counterparties of challenging global economic conditions and recent and possible future changes in the global financial markets.

In light of these risks, uncertainties and assumptions, the forward-looking events described in this registration statement may not occur. Forward-looking statements contained in this registration statement apply only as at the date of this registration statement. We undertake no obligation publicly to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

We strongly recommended that you read the risk factors set out in “Item 3.D. Risk Factors” of this registration statement for a more complete discussion of the factors that could affect our future performance and the industry in which we operate.

MARKET, ECONOMIC AND INDUSTRY DATA

This registration statement contains information regarding our business and the industry in which we operate and compete, which we have obtained from various third-party sources. Where information has been sourced from a third party it has been accurately reproduced and, so far as we are aware and are able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading.

We have generally obtained the market and competitive position data in this document from industry publications and surveys, and from studies conducted or data collected by third-party sources. Unless otherwise indicated, all sources for industry data and statistics are estimates or forecasts contained in or derived from internal or industry sources that we believe to be reliable. Market data used throughout this registration statement was obtained from independent sources and other publicly available information. Although we believe that these sources are reliable, we have not independently verified and do not guarantee the accuracy and completeness of this information.

Market data and statistics are inherently predictive and speculative and are not necessarily reflective of actual market conditions. Such statistics are based on market research, which itself is based on sampling and subjective judgments by both the researchers and the respondents, including judgments about what types of products and transactions should be included in the relevant market. In addition, the value of comparisons of statistics for different markets is limited by many factors, including that (i) the markets are defined differently; (ii) the underlying information was gathered by different methods; and (iii) different assumptions were applied in compiling the data. Accordingly, the market statistics included in this document should be viewed with caution and no representation or warranty is given by any person as to their accuracy.

PRESENTATION OF FINANCIAL INFORMATION; NON-IFRS MEASURES

Our consolidated financial statements appearing in this registration statement on Form 20-F are prepared in U.S. dollars and in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”).

Our consolidated financial statements account for the transfer of the Pharmaceutical Business from RB as a reorganization of entities under common control, retroactively at the book values of RB, including allocated costs from RB for all periods prior to the Demerger.  For periods subsequent to the Demerger, we are no longer a subsidiary of RB and therefore do not have allocated costs.  Rather, we have entered into service and support agreements with RB, and such expenses have been reflected in the accompanying financial statements for periods subsequent to the Demerger.  See Note 26 to the consolidated financial statements that summarizes these expenses.

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In this registration statement, we present certain financial information and measures and certain operational data which are not calculated in accordance with IFRS, such as Adjusted operating profit, Adjusted earnings, Adjusted earnings per share and free cash flow.

A summary of the key performance measures discussed in this registration statement, and of how such measures are used by our Board of Directors (the “Board”), is presented in “Item 5. Operating and Financial Review and Prospects,” including cross-references to the sections of this registration statement in which these non-IFRS measures are reconciled to the most directly comparable measure calculated in accordance with IFRS. The Board does not regard these non-IFRS measures as a substitute for the equivalent measures calculated and presented in accordance with IFRS or those calculated using financial measures that are calculated in accordance with IFRS. The non-IFRS measures used may not be directly comparable to similarly-titled measures used by other companies, including our competitors.

EXCHANGE RATE INFORMATION

Our financial information is presented in U.S. dollars, and our functional currency is U.S. dollars.  For convenience only, we have translated certain amounts in pounds Sterling into U.S. dollars.  Throughout this document, unless otherwise indicated, the following exchange rate has been used: £1 = $1.47.

The table below sets forth for the periods identified the noon buying rates in number of U.S. dollars per pounds Sterling as certified by the Federal Reserve Bank of New York for customs purposes. We make no representation that any pounds Sterling or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or pounds Sterling, as the case may be, at any particular rate, the rates stated below, or at all.

On July 8, 2016 , the exchange rate published by the Federal Reserve Bank of New York for the conversion of pounds Sterling to U.S. dollars was $1.00=£1.29.

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B.                                     Capitalization and Indebtedness

The table below sets forth our capitalization and indebtedness as of March 31, 2016.  This table should be read in conjunction with “Item 5. Operating and Financial Review and Prospects,” and the unaudited condensed consolidated interim financial statements and the related notes thereto, which appear elsewhere in this registration statement.

(1)              Represents the principal amount of borrowings of $594 million drawn down under the Term Facility (including $32 million of unamortized deferred financing costs). Subsequent to March 31, 2016, Indivior repaid an additional $36 million of principal on the Term Facility.  There were no outstanding amounts drawn under the Revolving Credit Facility. Please see “Item 5.A. — The Term Facility and Revolving Credit Facility” for a description of our Term Facility and our Revolving Credit Facility.

(2)              At March 31, 2016, $594 million of our borrowings are guaranteed and secured by Indivior Group restricted subsidiaries.

(3)     Represents Other reserves and Foreign currency translation reserve.

(4)               Total capitalization is total borrowings and total shareholders’ deficit.

C.                                     Reasons for the Offer and Use of Proceeds

Not applicable.

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D.                                     Risk Factors

You should carefully consider the risks described below, together with all of the other information in this registration statement on Form 20-F. The risks and uncertainties below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we believe to be immaterial may also adversely affect our business. If any of the following risks occur, our business, financial condition and results of operations could be seriously harmed and you could lose all or part of your investment. Further, if we fail to meet the expectations of the public market in any given period, the market price of our ADSs could decline. We operate in a highly competitive environment that involves significant risks and uncertainties, some of which are outside of our control. If any of these risks actually occurs, our business and financial condition could suffer and the price of our ADSs could decline.

RISKS RELATING TO OUR BUSINESS

We are primarily dependent on sales of SUBOXONE ® Film (buprenorphine and naloxone sublingual film), SUBOXONE ®  Tablet (buprenorphine and naloxone sublingual tablets), and SUBUTEX ®  Tablet (buprenorphine sublingual tablets), any decrease in which would significantly affect our results of operations and prospects

Substantially all our revenues derive from sales of SUBOXONE ®  Film (a buprenorphine and naloxone-based sublingual film), currently marketed in the United States, Australia and Malaysia, SUBOXONE ®  Tablet (a buprenorphine and naloxone-based sublingual tablet), currently marketed in 40 countries, and SUBUTEX ®  Tablet (a buprenorphine-based sublingual tablet), currently marketed in 21 countries, all of which are treatments for opioid dependence.  Any factors that decrease the sales of SUBOXONE ®  Film (which accounted for 80% of net revenues in 2015) or, to a lesser degree, SUBOXONE ®  Tablet or SUBUTEX ®  Tablet, would significantly decrease our net revenues. Our ability to maintain or increase sales of SUBOXONE ®  Film, SUBOXONE ®  Tablet and SUBUTEX ®  Tablet is subject to the following risks and uncertainties:

·                   development and marketing of competitive pharmaceutical products and alternative treatments for opioid dependence, particularly generic and branded versions of SUBOXONE ®  Film and an increase in the number of generic SUBOXONE ®  Tablet competitors beyond the current competitors;

·                   loss of patent protection or ability of competitors to challenge or circumvent our patents;

·                   issues impacting the production of SUBOXONE ®  Film, SUBOXONE ®  Tablet and SUBUTEX ®  Tablet, including but not limited to the ability to obtain a sufficient importation assessment for buprenorphine from the U.S. Drug Enforcement Administration (the “DEA”) or an import or export license from the UK Home Office and other similar regulatory authorities in other countries;

·                   technological advances, including the approval of new competing products for the treatment of opioid dependence;

·                   increase in the level of market acceptance of existing alternative treatments for opioid dependence, including, for example, Vivitrol and Probuphine;

·                   changes in reimbursement policies of third-party payors;

·                   exclusion or suspension from U.S. federal and state healthcare programs as a result of the outcome of on-going government investigations;

·                   legislation allowing or requiring the dispensation of generic products rather than branded products where a generic version of a drug is available;

·                   government action/intervention, including the imposition of restrictions on medication and treatment to control diversion and misuse;

·                   intervention by the WHO or by individual governments to reschedule buprenorphine as a substance with a higher potential for abuse than currently accepted;

·                   marketing or pricing actions by competitors;

·                   current payors requiring a reduction in pricing;

·                   public opinion towards treatments for opioid dependence;

·                   third-party allegations of intellectual property infringement;

·                   any enforced change in labelling, or other such regulatory intervention;

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·                   product liability claims; and

·                   physicians’ willingness to prescribe SUBOXONE ®  Film, SUBOXONE ®  Tablet and SUBUTEX ®  Tablet.

We believe we have sufficient working capital for our present requirements, that is, for at least the next 12 months from the date hereof. If sales of SUBOXONE ®  Film or, to a lesser degree, SUBOXONE ®  Tablet or SUBUTEX ®  Tablet, were to decrease significantly, we might need to increase rebates, discounts and chargebacks (which reduce net revenues) to remain competitive. Additionally, we may need to reduce our operating expenses, including research and development expenses, or seek to raise additional funds. Decreases in net revenues, failure to reduce operating expenses or raise additional funding in response to reduced sales or adverse impact of product mix could have a material adverse effect on our business, prospects, results of operations and financial condition. The risks of product concentration are also affected by geographic concentration (with the United States accounting for 80% of net revenues in 2015).

The approval and launch of generic or branded products that compete with SUBOXONE ®  Film, SUBOXONE ®  Tablet and SUBUTEX ®  Tablet could have a material adverse effect on our business, prospects, results of operations and financial condition

Generic products

The introduction of generic products typically leads to a loss of sales of the branded product and/or a decrease in the price at which branded products can be sold, particularly when there is more than one generic product available in the market. In addition, legislation enacted in the United States allows for, and in some instances in the absence of specific instructions from the prescribing physician mandates, the dispensing of generic products rather than branded products where a generic version is available.

In the United States, the exclusivity afforded to SUBOXONE ®  Tablet by its orphan drug status under U.S. Food and Drug Administration (“FDA”) regulations ended in October 2009, and similar exclusivity in the European Union, Norway and Iceland expires in 2016.  Our patents (assuming those at application stage are granted) relating to SUBOXONE ®  Film will expire on various dates up to 2030 (although certain claims of our latest-to-expire patent, U.S. Patent No. 8,475,832, have been found invalid at the District Court level).

In the United States, between October 2009 and July 2011, four manufacturers launched a generic version of SUBUTEX ®  Tablet. These generic formulations captured 99% of the monotherapy (buprenorphine only) market (by mg volume) and gained a 13% total market share (mono-buprenorphine and buprenorphine/naloxone) within 12 months of launch. We ceased sale and distribution of the branded SUBUTEX ®  Tablet in the United States in 2011.

In the United States, between March 2013 and January 2016, five manufacturers launched generic versions of SUBOXONE ®  Tablet. These generic formulations have gained a 14.8% market share (by mg volume) of the buprenorphine market in the United States. A fourth manufacturer received approval from the FDA for a generic version of SUBOXONE ®  Tablet in September 2014. We expect this fourth generic product, and additional generic products competing with SUBOXONE ®  Tablet, to enter the U.S. market, which could in the future further impact our share and pricing in the U.S. buprenorphine market, thereby resulting in a material impact on our net revenues and operating profit. We are aware that a further four manufacturers had, or still have, ANDA filings for generic buprenorphine and/or generic buprenorphine/naloxone products for the treatment of opioid dependence filed with the FDA.

Beginning in August 2013, we were informed of abbreviated new drug application (“ANDA”) filings in the United States by Watson Laboratories, Inc. (now Actavis Laboratories, Inc. (“Actavis”)), Par Pharmaceutical, Inc. (“Par”), Alvogen Pine Brook, Inc. (“Alvogen”), Teva Pharmaceuticals USA, Inc. (“Teva”), Sandoz Inc. (“Sandoz”) and Mylan Technologies Inc. (“Mylan”) for the approval by the FDA of generic versions of SUBOXONE® Film in the United States. We filed patent infringement lawsuits against all six generic companies, which means that the FDA cannot approve their generic entrants until the earlier of 30 months after notice to us of their ANDA filings or the disposition of the patent infringement proceedings. We and Sandoz have each submitted a proposed order to dismiss their patent litigation suit which are pending before the court. Trial against Teva, Actavis and Par in the lawsuits involving process patents is scheduled for November 2016. Trial against Teva in the lawsuit involving the Orange Book-listed patents for SUBOXONE® Film is scheduled for November 2016. Trial against Alvogen in the lawsuit involving those Orange Book-listed patents and process patents is scheduled for April 2017. Trial against Mylan in the lawsuit involving the Orange Book-listed patents for SUBOXONE® Film is scheduled for September 2017.

If any company is able to obtain FDA approval for its generic version of SUBOXONE® Film, it may be able to launch the product prior to the expiration of any or all the applicable patents protecting our SUBOXONE® Film, which could have a material adverse effect on our business, prospects, results of operations and financial condition.

Branded products

The introduction of branded products that compete with our products may lead to a loss of sales of our products and/or a decrease in the price at which our products can be sold. Orexo Inc. introduced a branded buprenorphine and naloxone sublingual tablet, ZUBSOLV ® , in September 2013 which has gained a 4.4% share (by mg volume) of the buprenorphine market in the United States, and Biodelivery Sciences International, Inc. (“BDSI”) launched its branded buccal film product, BUNAVAIL™, in November 2014 which has gained a 0.7% share (by mg volume) of the buprenorphine market in the United States. In June 2016, Braeburn Pharmaceuticals launched the Probuphine Implant, a six month treatment for opioid dependence. The Indivior

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Group filed a patent infringement lawsuit against BDSI on September 22, 2014 asserting a patent licensed from Monosol RX, LLC (“MSRX”) that is not Orange Book-listed for SUBOXONE ®  Film. In anticipation of launching its product and being sued by the Indivior Group, BDSI filed a lawsuit against the Indivior Group and MSRX in the US District Court for the Eastern District of North Carolina on September 20, 2014 seeking a declaratory judgment of non-infringement and invalidity of two patents relating to SUBOXONE ®  Film. For more information, see “Item 8.A. — Legal Proceedings.” Although SUBOXONE ®  Film has a market share (by mg volume) of 60.9% of the U.S. buprenorphine-based opioid dependence treatment market, the Indivior Group expects that increased branded competition could impact its share and pricing in the market. Any of the foregoing competitive developments could have a material adverse effect on our business, prospects, results of operations and financial condition. Among other things, developments of this nature have in the past, and could in the future, require the Indivior Group to increase further the level of rebates and other offsets to gross sales, particularly in its U.S. operations, as well as impact potential volume growth of any affected products, which, in turn, could reduce net revenues and, therefore, its results in future periods.

Our products may not be prescribed and dispensed in the manner permitted by the U.S. Drug Addiction Treatment Act of 2000 (“Data 2000”)

In the United States, the DEA classifies controlled substances into five schedules. DATA 2000 permits physicians who meet certain requirements to treat opioid dependence with Schedule III, IV and V narcotic medications that have been specifically approved by the FDA for that indication. Physicians who qualify for a waiver under DATA 2000 by meeting various conditions (including with regard to training and acceptance of limits on the number of patients that can be treated under the waiver) may prescribe and diagnose such medications in settings (for example, their own offices) other than those traditionally associated with opioid dependence treatment, such as methadone clinics.

If buprenorphine is in the future viewed as having a greater potential for abuse than is reflected by its current classification, it may be reclassified as a Schedule II substance, in which case our current and future products which contain buprenorphine would no longer qualify under DATA 2000 and would have to be prescribed and dispensed in the same way as other Schedule II substances approved for the treatment of opioid dependence, such as methadone, which would significantly limit the settings and circumstances in which these products can be prescribed, and therefore have a material adverse effect on sales of our products containing buprenorphine. In addition, increased incidence of misapplication by prescribing physicians, including overriding government-imposed restrictions on patient limits per physician, could result in more stringent requirements. Such developments could have a material adverse effect on our business, results of operations and financial condition.

Clinical trials for the development of products, including our key pipeline products, may be unsuccessful and our product candidates may not receive authorization for manufacture and sale

The number and duration of pre-clinical studies and clinical trials that are required varies depending on the product candidate, the indication being evaluated, the trial results and the regulations applicable to the particular product candidate. In addition, we are required to obtain regulatory approvals to conduct clinical trials and manufacture drugs before they can be marketed. This development process takes many years and can be very expensive.

Before obtaining regulatory approvals for the commercial sale of each product under development, we must demonstrate, through clinical and other studies, that the product is safe and effective for the claimed use or uses, and also demonstrate that the product is of appropriate quality. Such clinical and other studies can be delayed or halted for a variety of reasons, including:

·                   delays or failures in obtaining regulatory authorization to commence a trial because of safety concerns of regulators relating to our product candidates or similar product candidates of our competitors or failure to follow regulatory guidelines;

·                   delays or failures in obtaining clinical materials and sufficient quantities of the product candidate for use in trials;

·                   delays or failures in reaching agreement on acceptable terms with prospective study sites;

·                   delays or failures in obtaining approval of our clinical trial protocol from an institutional review board to conduct a clinical trial at a prospective study site;

·                   delays in recruiting patients to participate in a clinical trial;

·                   failure of clinical trials and clinical investigators to comply with FDA and other regulatory agencies’ good clinical practice (“GCP”) requirements;

·                   unforeseen safety issues, including negative results from on-going pre-clinical studies and adverse events associated with product candidates;

·                   inability to monitor patients adequately during or after treatment;

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·                   disagreements with collaborative partners on the planning and execution of product development; or

·                   insufficient funds to complete the trials.

Both RBP-6000 and RBP-7000 are currently undergoing various Phase III studies. However, the results from early clinical trials may not be predictive of results obtained in later and larger clinical trials, and therefore RBP-6000 and RBP-7000 may fail to show the desired safety and efficacy in later clinical trials despite having progressed successfully through initial clinical testing. In that case, the FDA or the equivalent regulatory authority in jurisdictions outside the United States may determine our data are not sufficiently compelling to warrant marketing approval and may require us to engage in additional clinical trials or provide further analysis which may be costly and time-consuming and substantially delay the receipt of such regulatory approval (which may delay the launch of RBP-6000 beyond 2018 as currently targeted). For example, the FDA issued a non-approval of the Company’s Nasal Naloxone in a Complete Response Letter to the Company in November 2015 which resulted in us discontinuing further development of the formulation incidental to the new drug application (“NDA”), and impairing the related intangible assets as at December 31, 2015. Furthermore, on April 28, 2016 we announced that RBP-6300, the oral swallowable capsule of buprenorphine hemiadipate for the treatment of opioid dependence, completed its Phase I clinical pharmacokinetic study (RB-EU-14-0001) but that it did not achieve the anticipated pharmacokinetic profile in humans to justify proceeding further with this technology and, as a result, we are evaluating alternative options for the development of an orally bioavailable buprenorphine-based product with abuse deterrent properties. In addition, the development of RBP-7000, currently concluding its Phase III long-term safety extension trial, has been delayed due to an external manufacturing issue identified with one out of six stability batches required for NDA submission. We believe this issue is now rectified and additional batches will be manufactured to provide the required data but this has resulted in a delay to the likely approval date and we currently expect to file an NDA for RBP-7000 in September 2017 and are targeting U.S. approval in mid-2018. Many companies in the pharmaceutical industry have suffered significant setbacks in drug development and there can be no guarantee that FDA approval will ultimately be obtained.

Even if the clinical trials of any product under development were to be completed, they may not demonstrate the quality, safety and efficacy required to result in an approvable or a marketable product which would delay or prevent regulatory approval of the product. In addition, regulatory authorities in Europe, the United States and other countries may require additional studies, which could result in increased costs and significant development delays, or termination of a project if it would no longer be economically viable.

We rely on third parties to conduct our clinical trials, and if they do not properly and successfully perform their legal and regulatory obligations, as well as their contractual obligations to us, we may not be able to obtain regulatory approvals for our product candidates within the timeframes currently envisaged, or at all and may be exposed to regulatory sanctions

We rely on contract research organizations and other third parties to assist in designing, managing, monitoring and otherwise carrying out our clinical trials, including with respect to site selection, contract negotiation and data management. We do not control these third parties and, as a result, may not be able to prevent delays. If we, contract research organizations, other third parties assisting us or our study sites fail to comply with applicable GCP requirements, the clinical data generated in the relevant clinical trials may be deemed unreliable and the FDA or its non-U.S. counterparts may require us to perform additional clinical trials before approving our marketing applications.

In addition, clinical trials must be conducted with products produced under the FDA’s and non-U.S. regulatory agencies’ current good manufacturing practices (“cGMP”) regulations. Our failure, or the failure of third parties conducting clinical trials on our behalf, to comply with these regulations may require us to repeat or redesign clinical trials, which would delay the regulatory approval process or expose us to regulatory sanctions.

If our clinical trials do not meet regulatory requirements, or if third parties conducting our clinical trials need to be replaced, clinical trials may be extended, delayed, suspended or terminated. If any of these events occur, we may not be able to obtain regulatory approval for our product candidates or succeed in our efforts to create approved line extensions for our existing products or generate additional useful clinical data in support of these products, which would adversely affect our business, prospects, results of operations and financial condition.

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Our ability to obtain patient participation in clinical trials may impact our ability to successfully conduct such trials

The identification and qualification of patients for participation in clinical trials of our product candidates is critical to our success. Clinical trials are established under specific protocols which regulate the manner in which they are conducted. Protocols specify the number of patients to be recruited into the study and the characteristics of patients who can and cannot be accepted into the study. We may not be able to identify, recruit and enroll a sufficient number of patients for a number of reasons, such as the specified characteristics being too tightly defined, resulting in a very small population of suitable patients, the emergence of a competing drug, either one that is approved or another drug in the clinical stage of development, limited availability of clinical trial sites for prospective subjects or perceived risks and benefits of the product candidate under study. Clinical trials may be delayed or impacted in the event we are unable to obtain client participation in such trials, which in turn may adversely affect our business, prospects, results of operations and financial condition.

The regulatory approval process is expensive, time-consuming and uncertain and may prevent us or our partners from obtaining approvals for the commercialization of some or all of our product candidates

The research, testing, manufacturing, labelling, advertising and promotion, distribution and import and export of pharmaceutical products are subject to extensive regulation, and regulations differ from country to country. Approval in one jurisdiction does not ensure approval in other jurisdictions. The regulatory approval process is lengthy, expensive and uncertain, and we may be unable to obtain approval for our product candidates. For example, we are not permitted to market our product candidates in the United States or in the EU member states until the FDA, the European Commission, or the competent authorities of the EU member states respectively have approved, generally, an NDA, a biologics license application (“BLA”) or a marketing authorization application. The application must contain information demonstrating the quality, safety and efficacy of the medicinal product, including data from the pre-clinical and clinical trials, information pertaining to the preparation and manufacture of the drug or biologic, analytical methods, product formulation, details on the manufacture of finished products, proposed product packaging, labelling and information concerning the medicinal product and its intended uses. Submission of an application for marketing authorization does not assure approval for marketing in any jurisdiction, and we may encounter significant difficulties or costs in our efforts to obtain approval to market products. If we are unable to obtain regulatory approval for our product candidates, we will not be able to commercialize them and recoup our research and development expenses. If we fail to obtain approval, or approval is delayed or is received for narrower conditions of use than sought, our prospects, financial condition and results of operations could be adversely affected. Even if product candidates are approved there is no guarantee that they will be able to achieve market acceptance.

A regulator may impose a risk evaluation and mitigation strategy or post-marketing obligations on any new product developed by us

We may be required to include, as part of an NDA, a proposed risk evaluation and mitigation strategy (a “REMS”) whose goal is to mitigate potential risks which may be associated with the use of a product and to inform patients and prescribers of those risks. We may also be required to include a package insert directed at patients, a plan for communication with healthcare providers, restrictions on a drug’s distribution or a medication guide to provide information to consumers about the drug’s risks and benefits. For example, the FDA requires a REMS for SUBOXONE ®  Film, and other products that we sell in the future, including RBP-6000, may become subject to a REMS specific to the product or shared with other products in the same class of drug. Depending on the nature of the REMS, the cost to implement the REMS may be high and the impact to the business may be significant.

In the EU, we may be required to adopt a risk management plan (“RMP”) and our products could be subject to specific risk minimization measures, such as restrictions on prescription or supply, the conduct of post-marketing safety or efficacy studies, or the distribution of patient and/or prescriber educational materials.

In addition, post-marketing obligations in the form of further clinical trials may be imposed to further expand on the evaluation of the risk/benefit profile of the product relative to any potential safety concerns. These trials typically occur after approval and according to pre-specified timelines set by regulatory authorities. Depending on the nature of the post-marketing commitment, trial completion can be a lengthy process. Failure to comply with any of these requirements may potentially lead to suspension of the marketing authorization for the product and other penalties. The costs and other consequences of non-compliance with any of the post-approval obligations described above could have an adverse impact on its business, prospects, results of operations and financial condition.

Product candidates that receive regulatory approval may be unable to achieve expected market acceptance

Our ability to generate significant revenue from our pipeline products, and in particular from RBP-6000, depends on their acceptance by physicians, patients, third-party payors and the medical community. The market acceptance of any product

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depends on a number of factors, including the following:

·                   indication statement and warnings approved by regulatory authorities on the product label;

·                   continued demonstration of efficacy and safety in commercial use;

·                   the prevalence of the disease or condition for which the product is approved and the severity of side effects;

·                   legislation and regulation controlling the conditions of treatment and the distribution of the product;

·                   physicians’ willingness to prescribe the product and our ability to educate physicians with respect to new products;

·                   reimbursement from third-party payors such as government healthcare programs and insurance companies;

·                   the price of the product relative to alternative treatments, including generic products;

·                   perceived advantages over alternative treatments;

·                   relative convenience and ease of administration;

·                   the extent to which the product is approved for inclusion on formularies of hospitals and managed care organizations;

·                   the nature of any post-approval risk management plans mandated by regulatory authorities;

·                   marketing and distribution support; and

·                   the existence of alternative products marketed by competitors.

Any factors preventing or limiting the market acceptance of our products, in particular RBP-6000, could have a material adverse effect on its sales and hence its business, results of operations and financial condition.

Failure to obtain and maintain patents and protect other proprietary rights, including in-licenses of such rights from third parties, may adversely affect us

Our success depends, in large part, on our ability to obtain and maintain patent and other intellectual property protection, particularly for our drug, compound, product, delivery, formulation and methods of treatment technologies and associated manufacturing processes in relation to both our products and our product candidates. The process of obtaining patents can be lengthy and expensive. We own, or license in, a number of patent rights in the United States and other countries covering certain products and have also developed brand names and trademarks for other products. Our business is currently materially dependent upon a group of owned as well as in-licensed patents relating to SUBOXONE ®  Film. We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary technologies and future products are covered by valid and enforceable patents or are effectively maintained as trade secrets or confidential information within the Indivior Group. Our existing patents, and any future patents we obtain, may not be sufficiently broad to prevent others from using our technologies or from developing competing products and technologies. If third parties disclose or misappropriate our proprietary rights, it may materially and adversely impact our business, prospects, results of operations and financial condition. Moreover, our ability to obtain and enforce patents and other proprietary rights is critical to our business strategy and success.

The patent positions of many pharmaceutical and life sciences companies are highly uncertain and involve complex legal and factual questions. In some cases, the legal principles applying to these cases may be changing or unresolved. As a result, the validity and enforceability of our patents cannot be predicted with certainty. In addition, we cannot guarantee that:

·                   we were the first to make the inventions covered by each of our issued patents and pending patent applications;

·                   we were the first to file patent applications for these inventions;

·                   patents will be granted in connection with any of our currently pending or future applications;

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·                   other companies will not independently develop similar or alternative technologies or duplicate any of our technologies by inventing around our claims;

·                   a third party will not challenge our proprietary rights, and if challenged that a court will hold that our patents are valid and enforceable;

·                   any patents issued to us or our collaboration partners will cover our products as ultimately developed, or provide us with any competitive advantages, or will not be challenged by third parties;

·                   we will develop additional proprietary technologies that are patentable; or

·                   the patents of others will not have an adverse effect on our business.

We also rely on trade secrets and other unpatented confidential information to maintain our competitive position but there can be no assurance that others may not independently develop the same or similar products or technologies, and may also obtain patents and other intellectual property protection for them. We have sought to protect trade secrets and confidential information, in some cases through the provisions of confidentiality and non-use agreements with our employees, consultants, advisers and partners. Nevertheless, it may not always be possible to prevent disclosure of our trade secrets and other confidential information and for us to obtain an adequate remedy in the event of unauthorized disclosure or use of such information.

We have entered into a number of collaborative arrangements for the development and commercialization of products (including MSRX in relation to SUBOXONE ®  Film and XenoPort for arbaclofen placarbil).  In connection therewith, we share certain of our proprietary knowledge with such collaborative partners and it may not be possible or practical to prevent our partners from developing similar or functionally equivalent products. In the event of any disputes between us and such partners, such disputes may threaten our ability to continue using such proprietary knowledge and, in turn, could impact our ability to market our products.

We have entered into and rely upon a number of in-licensing arrangements with third parties, including in relation to SUBOXONE ®  Film, in order to provide the freedom to use certain of their technologies in our products. If we do not continue to comply with the terms of such licenses, we may not be able to maintain them. The termination of such licenses could have a material adverse effect on our business, results of operations and financial condition. In addition, patent laws in the jurisdictions in which we have operations and/or their interpretation may also change over time. We cannot predict the effect that any such changes would have on our operations and our ability to protect our current and future products and technologies.

If we fail to obtain and maintain sufficient intellectual property protection for our current and future products and technologies, our ability to successfully and fully exploit these products and technologies could be adversely affected, which in turn would adversely affect our business, prospects, results of operation and financial condition.

We may not be able to assert proprietary rights in intellectual property developed by our employees, consultants or partners, or under sponsored research agreements

If our employees, consultants or partners develop inventions or processes independently that may be applicable to our products or technologies under development, disputes may arise about ownership of proprietary rights to those inventions and processes. Such inventions and processes will not necessarily become our property, but may remain the property of those persons or their employers or the persons may be entitled to compensation in respect of those inventions. Protracted and costly litigation could be necessary to enforce and determine the scope of our

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proprietary rights.

We have also engaged in collaborations, sponsored research agreements and other arrangements with academic researchers and institutions, some of which have received and may receive funding from government agencies. Although we have sought to retain ownership of all intellectual property rights pertaining to inventions which may result from such collaborations, there can be no assurance that governments, institutions, researchers or other third parties will not also attempt to claim certain rights to such inventions. Failure to secure proprietary rights over such intellectual property, for any reason, could adversely affect our business, prospects, results of operations and financial condition.

We may incur substantial costs as a result of litigation or other proceedings relating to patents and other intellectual property rights, and we may be unable to protect our rights to, or commercialize, our products

Litigation and other similar proceedings, such as inter parties reviews in the United States (which are initiated by third parties to challenge the validity of a patent) relating to infringement, validity or misappropriation of patent and other intellectual property rights in the pharmaceutical and life sciences industry are common. We may receive notifications of challenges to the validity of our patents or alleged infringement of patents owned by third parties.  We have historically incurred, and expect that we will continue to incur, significant costs in connection with the ANDA proceedings relating to SUBOXONE® Film in the United States.  If we choose to go to court to prevent a third party from infringing our patents, our licensed patents or our partners’ patents (where we have the right to do so), that allegedly infringing third party has the right to ask the court to rule that these patents are invalid and/or should not be enforced against that third party. For example, the U.S. District Court for the District of Delaware ruled in June 2016 that certain claims in our Patent No. 8,475,832 are invalid. (We intend to file a notice of appeal in regard to aspects of this decision.) These lawsuits are expensive and time-consuming, even if we are ultimately successful in stopping the infringement of these patents. In addition, there is a risk that a court will decide that these patents are not valid or not infringed and that we do not have the right to prevent the other party from using the patented subject matter. Dr. Reddy’s Laboratories has filed a petition against us and, as to certain patents, our licensor MSRX, before the U.S. Patent and Trademark Office (“USPTO”) seeking inter partes review of three patents relating to SUBOXONE® Film.  Recently, the USPTO declined to institute inter partes review of the same three patents based on similar petitions filed by Teva. In addition, we have filed appeal from an adverse finding by the USPTO regarding BDSI’s petition for inter partes review of Claims 15—19 of U.S. Patent No. 8,475,832.  There can be no assurance that these, or other litigation that we may file in the future, will be successful in preventing the infringement of our patents, that we will be able to successfully defend the validity of our patents, that any such litigation will be cost-effective, or that the litigation will have a satisfactory result for us. In addition, such litigation diverts the attention of management and development personnel. Failure to stop infringement of our patents or an unsatisfactory result in litigation would adversely affect our business and results of operations.

A third party may claim that we or our manufacturing or commercialization partners are using inventions covered by the third party’s patent rights, or that we or such partners are infringing, misappropriating or otherwise violating other intellectual property rights, and may go to court to stop us from engaging in our ordinary course operations and activities, including manufacturing or selling our products. There is a risk that a court could decide that we or our partners are infringing, misappropriating or otherwise violating third-party patents or other intellectual property rights, which could have a material adverse effect on our business and results of operations. In addition, such litigation diverts the attention of management and development personnel.

We may initiate or defend legal proceedings relating to our patents alongside a collaborator or third party with an interest or right in the relevant patents. In this scenario, our strategy for asserting or defending our rights might be impacted by that of our co-claimant or co-defendant which, in turn,  may have an adverse impact on our existing commercial relationship.

In the pharmaceutical and life sciences industry, like other industries, it is not always clear to industry participants, including the Indivior Group, which patents cover various types of products or methods. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform. If we are sued for patent infringement, we would need to demonstrate that our products or methods do not infringe the patent claims of the relevant patent and/or that the patent claims are invalid or unenforceable, which we may not be able to do, and which could in turn result in our being required to pay substantial sums. These sums potentially include damages, legal fees, and increased damages if we are found to have infringed such rights wilfully. These damages potentially include increased damages and legal fees if we are found to have infringed such rights wilfully. Further, if a patent infringement suit is brought against us, our research, development, manufacturing or sales activities relating to the product or

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product candidate that is the subject of the suit may be delayed, materially affected or terminated by the grant of an injunction against us.

We cannot be certain that others have not filed patent applications for inventions covered by our licensors’ or our issued patents or pending applications, or that we or our licensors were the first inventors. Our competitors may have filed, and may in the future file, patent applications covering subject matter similar to those of the Indivior Group. Any such patent application may have priority over our or our licensors’ patents or applications and could further require us to obtain rights to patent rights covering such subject matter. For example, in June 2016, a third party’s patent application resulted in an issued patent that contains claims that could relate to SUBOXONE ®  Film. In the United States, if another party has filed a patent application on inventions similar to those of the Indivior Group, we may have to participate in an interference proceeding declared by the USPTO to determine priority of invention in the United States. The costs of these proceedings could be substantial, and it is possible that such efforts would be unsuccessful, resulting in a loss of our U.S. patent position with respect to such inventions. Patent interferences are limited or unavailable for applications filed after March 16, 2013.

As a result of patent infringement claims, or in order to avoid potential infringement claims, we or our collaborators may choose to seek, or be required to seek, a license from the third party, which would be likely to include a requirement to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or at all. Even if a license can be obtained on acceptable terms, the rights may be non-exclusive, which would potentially give our competitors access to the same intellectual property rights. If we are unable to enter into a license on acceptable terms, we, or our collaborators, could be prevented from commercializing one or more of our product candidates, or forced to modify such product candidates, or to cease some aspect of our business operations, which could adversely affect our business, prospects, results of operations or financial condition.

The cost to us of any patent litigation or other proceedings, even if resolved in our favor, could be substantial. Some of our competitors may be able to sustain the costs of complex patent and other intellectual property litigation more effectively than we can because they have substantially greater resources than the Indivior Group. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue its operations.

Any of the foregoing could have a material adverse effect on our business, prospects, results of operations and financial condition.

We may not be able to protect our intellectual property rights throughout the world which could have an adverse effect on its business, results of operations and financial condition

Filing, prosecuting and defending patents relating to all of our product candidates and technologies throughout the world would be prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products, and further, may export otherwise infringing products to territories where we have patent protection but where enforcement is more difficult. These products may compete with our future products in jurisdictions where we do not have any issued patents and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals, which could make it difficult for us to stop infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert efforts and attention from other aspects of our business, which could adversely affect our operations and financial condition. Moreover, the patent rights can be challenged in post-grant or inter partes review.

If we are unable to secure new products or compounds for development, our business, prospects, results of operations and financial condition could be materially adversely affected

We intend to grow our business over the long term by acquiring or in-licensing and developing additional products and product candidates that we believe have significant commercial potential. For example, on May 14, 2014, we entered into an exclusive worldwide licensing agreement with XenoPort, Inc. for the development and commercialization of a clinical-stage oral product candidate called arbaclofen placarbil for the treatment of alcohol use disorder. Future growth through acquisition or in-licensing will depend upon the availability of suitable products and product candidates for acquisition or in-licensing at acceptable prices and on acceptable terms and conditions. Even if appropriate opportunities are available, we may not be able to successfully identify them, or may not have the financial, marketing and sales resources relative to our competitors that are necessary to pursue them.

In addition, any growth through development will depend upon us identifying and obtaining product

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candidates, our ability to develop those product candidates and the availability of funding to complete the development of, obtain regulatory approval for and commercialize these product candidates. We may not be able to successfully manage the risks or other anticipated and unanticipated problems in connection with an acquisition or in-licensing, and may not be able to realize the anticipated benefits of any acquisition or in-licensing for a variety of reasons, including the possibility that a product candidate proves not to be safe or effective in later clinical trials, a product fails to reach its forecast commercial potential or the integration of a product or product candidate gives rise to unforeseen difficulties and expenditures. It is common for multiple products and product candidates to be evaluated for the same indication by multiple parties at the same time, and we cannot predict whether our products’ forecast commercial potential will come to fruition. Any failure in identifying and managing these risks and uncertainties effectively would have a material adverse effect on our business, prospects, results of operations and financial condition.

Failure to retain key personnel or attract new personnel, could have an adverse effect on us

We rely upon a number of key executives and employees (including our sales force with high quality access to physicians) who have an in-depth and long-term understanding of the industry and our technologies, products, programs, collaborative relationships and strategic goals. Competition for such personnel in the biotechnology and pharmaceutical industries is intense, and there can be no assurance that we will be able to retain such personnel.

We do not carry “key person” insurance. The loss of the services of any of our key executives or employees could delay or prevent the successful completion of some of our vital activities. Any employee may terminate his or her employment at any time without notice or with only short notice and without cause or good reason. The resulting loss of institutional knowledge may have a material adverse effect on our operations and future growth.

We may fail to obtain and maintain coverage, or an adequate level of reimbursement from governmental or third-party payors for our products

Our revenues are partly dependent on the coverage and level of reimbursement provided to us by private insurance companies and governmental reimbursement schemes for pharmaceutical products, such as Medicare and Medicaid in the United States. The cost of treatment established by healthcare providers, private health insurers and other organizations, such as health maintenance organizations and managed care organizations, are under downward pressure and this, in turn, could result in lower prices for our products and/or in reduced demand for our products. When generic versions of a product are available, payors may impose access restrictions on the branded product, such as requiring prior authorization, imposing high patient co-pays, or precluding coverage altogether. These restrictions may be placed on our products. In particular, this may result in competitor generic versions of SUBOXONE ®  Film being preferred to SUBOXONE ®  Film, thereby further eroding the loss of market share for SUBOXONE ®  Film in the United States.

In addition, changes to governmental policy or practices could adversely affect the level of reimbursement through governmental schemes. In the United States, there continue to be proposals by legislators at both federal and state levels, regulators and third-party payors to keep healthcare costs down while expanding individual healthcare benefits. Recently, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products. For example, there have been several recent U.S. Congressional inquiries and proposed bills designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs and reform government program reimbursement methodologies for drug products. Similarly, in the EU member states, legislators, policymakers and healthcare insurance funds continue to propose and implement cost-containing measures to keep healthcare costs down, due in part to the attention being paid to healthcare cost containment and other austerity measures in the EU. Certain of these changes could impose limitations on the prices that we will be able to charge for our products and any approved product candidates. Further, an increasing number of EU member states and other foreign countries use prices for products established in other countries as “reference prices” to help determine the price of the product in their own territory. Consequently, a downward trend in prices of products in some countries could contribute to similar downward trends elsewhere.

In addition, the on-going budgetary difficulties faced by a number of EU member states have led and may continue to lead to substantial delays in payment and payment partially with government bonds rather than cash for products, which could negatively impact our revenues and profitability. Moreover, in order to obtain reimbursement of products in some countries, including some EU member states, we may be required to conduct clinical trials that compare the cost-effectiveness of our products to other available therapies.

The prices for certain of our products, when commercialized, may be high compared to other pharmaceutical products. We may encounter particular difficulty in obtaining satisfactory pricing and reimbursement for any new and highly priced products for which it is considered that the economic and therapeutic rationales are not established. The failure to obtain and maintain pricing and reimbursement at satisfactory levels for such products may adversely affect our results of

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operations and prospects.

There can be no assurance that our products will obtain favorable reimbursement status in any country. The failure to obtain and maintain reimbursement, or an adequate level of reimbursement, for our products may have a material adverse effect on our business, prospects, results of operations and financial condition . Manufacturing or supply problems encountered by us or our suppliers could have a material adverse effect on our business, prospects, results of operations and financial condition

We or our suppliers are subject to strict regulatory and manufacturing requirements

The manufacture of our products is highly exacting and complex, due in part to strict regulatory and manufacturing requirements. Problems may arise during manufacturing for a variety of reasons, including equipment malfunction, failure to follow specific protocols and procedures, lapses in oversight, defective raw materials and environmental factors.

The active pharmaceutical ingredients used in our products are manufactured at the Fine Chemical Plant (“FCP”) located in Hull, United Kingdom. Ownership of the FCP was transferred from Reckitt Benckiser Healthcare (UK) Ltd. (“RB Health”), a member of the RB Group, to Indivior in April 2015. The FCP manufactures the buprenorphine hydrochloride active pharmaceutical ingredient used in the formulation of SUBUTEX ® Tablet, SUBOXONE ®  Tablet, SUBOXONE ®  Film, TEMGESIC ®  and BUPRENEX ® . Any issues experienced at the FCP could result in delays in the production of these products.

All facilities and manufacturing techniques used for the manufacture of our products must be operated in conformity with the mandatory manufacturing standards (often referred to as cGMP) of the FDA, the UK Medicines and Healthcare products Regulatory Agency (“MHRA”) and other regulatory authorities. Manufacturing facilities are subject to periodic unannounced inspection by the FDA, MHRA and other regulatory authorities. Failure to comply with applicable legal and regulatory requirements subjects our manufacturing facilities or our third-party suppliers to possible legal or regulatory action, including shutdown, which may adversely affect our ability to manufacture, or our third-party suppliers’ ability to supply, finished products. We rely on a single source in the United States for the production of SUBOXONE ®  Film and on a single source in the United Kingdom for the production of SUBOXONE ®  Tablet and SUBUTEX ®  Tablet.

We rely on third parties for the supply, manufacture, packaging and distribution of our products

We rely on a limited number of key third parties for the supply, manufacture, packaging and distribution of our products. In particular, SUBOXONE ®  Film is manufactured under an exclusive license and supply agreement with MSRX signed in August 2008 in reliance on MSRX’s proprietary PHARMFILM ®  technology. In addition, the naloxone hydrochloride active pharmaceutical ingredient is procured mainly from two suppliers for both SUBOXONE ®  Tablet and SUBOXONE ®  Film. Supply of naloxone hydrochloride for SUBOXONE ®  Tablet is single-source while supply for SUBOXONE ®  Film is dual-source. In addition, as part of the Demerger, we entered into a seven-year supply agreement with RB Health, whereby RB Health assumed responsibility for the formulation, compressing, and finished good packaging of SUBUTEX ®  Tablet and SUBOXONE ®  Tablet, as well as the formulation, filling, and terminal sterilization of TEMGESIC ®  and BUPRENEX ® .

Any delay in supplying, or any failure or refusal to supply, products to, or delays in manufacturing by, our suppliers, or any catastrophe or natural disaster affecting such third party manufacturing facilities or suppliers, could result in our inability to meet the commercial demand for our products, which in turn could materially adversely affect our business, prospects, results of operations and financial condition. In particular, such third party suppliers or manufacturers may not have contingency plans which may allow them to continue to supply or manufacture, within the contractual deadlines or at all, our products.

In addition, the loss of one of any supplier could require us to obtain regulatory clearance for a new supplier in the form of a “prior approval supplement” and to incur validation and other costs associated with the transfer of the active pharmaceutical ingredient (“API”) or manufacturing process. It would prove to be particularly difficult to find an alternative supplier to MSRX, given the reliance on MSRX’s proprietary PHARMFILM ®  technology. We believe it could take up to two years or longer in certain cases to qualify a new supplier or manufacturer, and if we are not able to obtain the ingredients or finished products from suppliers or manufacturers on acceptable terms and at reasonable prices, or at all, our business, prospects, results of operations and financial condition could be adversely affected.

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Product liability and product recalls could have a material adverse effect on us

The testing, manufacturing, marketing and sales of pharmaceutical products entail a risk of product liability claims, product recalls, litigation and associated adverse publicity. Unanticipated side effects of, or manufacturing defects in, our products could exacerbate a patient’s condition or could result in serious injury or impairments or even death. This could result in product liability claims and/or recalls of one or more of our products. In many countries, including in EU member states, national laws provide for strict (no-fault) liability, which applies where harm is caused both by a defective product and by the act or omission of a third party.

Product liability claims may be brought by individuals seeking relief for themselves, or by groups seeking to represent a class of injured patients. Further, third-party payors, either individually or as a putative class, may bring actions seeking to recover monies spent on products. The risk of product liability claims may also increase if we are subject to regulatory action by the FDA, the European Medicines Agency (the “EMA”) or other competent authorities, or following a product recall. The cost of defending such claims is expensive even when the claims are not merited. A successful product liability claim against us could require us to pay a substantial monetary award. Moreover, an adverse judgment in a product liability suit, even if insured or eventually overturned on appeal, could generate substantial negative publicity about our products and business and inhibit or prevent commercialization of other products.

Although we carry product liability insurance, current coverage may not be adequate. Further, product liability insurance is difficult to obtain and may not be available in the future on acceptable terms or at all.

Product recalls may be issued at our discretion or at the discretion of our suppliers, government agencies and other entities that have regulatory authority over pharmaceutical sales. Any recall of our products could materially adversely affect our business by rendering us unable to sell that product for some time and by adversely affecting our reputation. In addition, product liability claims, product complaints or product quality issues reported by us to authorities as required by local regulations could result in an investigation (conducted by the FDA, the EMA, or the competent authorities of EU member states or other national authorities) into the safety or efficacy of our products, our manufacturing processes and facilities, or our marketing programs. An investigation could potentially lead to a recall of our products or more serious enforcement actions including seizure, injunction or criminal charges, proposed changes to the indications for which they may be used or suspension or withdrawal of approval. The Company has no insurance coverage for product recalls.

Any of the foregoing could have a material adverse effect on our business, prospects, results of operations and financial condition.

Insufficient importation assessments for necessary APIs or the failure to obtain or maintain necessary import and export licenses may adversely impact our ability to meet commercial demand or complete clinical trials

APIs in many of our products and product candidates are controlled substances that are subject to regulation in all of the countries in which we market our products. In the United States, pharmaceutical products containing controlled substances are subject to extensive regulation under the U.S. Controlled Substances Act of 1970, as amended (the “CSA”), which establishes, among other things, certain registration,

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security, recordkeeping, reporting, manufacturing and procurement quotas, import, export and other requirements administered by the DEA. All countries in which we market our products are subject to similar controls supervised by the relevant regulatory authorities, for example the Home Office in the United Kingdom.

An annual importation assessment value for buprenorphine is set by each importing country through the International Narcotics Control Board (the “INCB”). In the United States, the DEA limits the availability of buprenorphine, and may limit the availability of active ingredients in other product candidates. As a result, our importation assessment for buprenorphine in the countries in which we market our products may not be sufficient to meet commercial demand or to complete clinical trials for buprenorphine-based and other product candidates. In the United States, for a new drug the DEA may not establish an importation assessment following FDA approval of an NDA for a controlled substance until after the DEA reviews and provides for public comment on the labelling, promotion, risk management plan and other documents associated with such product. A DEA review of such materials may result in potentially significant delays in obtaining an importation assessment for controlled substances, a reduction in the assessment issued to us or the elimination of an assessment entirely.

Any delay or refusal by the DEA or a similar non-U.S authority in establishing our importation assessment for controlled substances, any importation assessment that is established but which is insufficient for our purposes, or any failure to obtain or maintain the necessary import and export licenses from the relevant authorities, could delay, stop or affect clinical trials, product launches or sales of products, which could have a material adverse effect on our business, financial condition and results of operations.

We may experience delays in the shipment of products and APIs

The shipment of pharmaceutical products that contain controlled substances, including certain of our products and product candidates, require import and export licenses from the relevant authorities. We may not be granted or, if granted, may not maintain, such licenses. Even if we maintain such licenses, shipments may be held up in transit, which could cause significant delays and may lead to product batches being stored outside required temperature ranges. Inappropriate storage may damage the product shipment resulting in a partial or total loss of revenue from one or more shipments of our products and product candidates and necessary APIs. A partial or total loss of revenue from one or more such shipments could have a material adverse effect on our business, results of operations and financial condition.

We are dependent on a relatively small number of significant customers for a substantial proportion of our net revenues

A limited number of significant customers have historically accounted for a substantial portion of our net revenues. Our three largest customers are wholesalers that accounted for 76% of global gross sales in 2015, which equated to 71% of our net revenues (2014: 75% of global gross sales, which equated to 69% of our net revenues).

There can be no assurance that these customers will continue their relationship with us, particularly if generic versions of our products are available at a lesser cost. In particular, there is a risk that any of such customers may be lost as a result of the introduction to an alternative generic to SUBOXONE ®  Film in the United States. Demand for our products is largely derived from acceptance of the products by physicians, patients, pharmacists and third-party payors. Accordingly, if physicians were no longer willing to prescribe, patients no longer accepted, pharmacists able or mandated to switch the prescription due to the existence of an A/B rated generic (i.e., a generic product which is considered to be a therapeutic equivalent and can be substituted by a pharmacist without the consent of the patient or physician) or third-party payors were no longer willing to reimburse for our products, these significant customers could reduce their purchasing levels or cease buying products from us at any time.

If we cease to do business with a significant customer or if sales of our products to a significant customer materially decrease, due to physician and/or patient demand, pharmacy switching or payors’ lack of willingness to reimburse, our business, prospects, results of operations and financial condition may be materially adversely affected.

In addition, we may have a large amount of outstanding receivables with a significant customer at any one time. If there is an adverse change in the creditworthiness of such a significant customer, or if it were, for example, to file for bankruptcy protection, we could be prevented from collecting our receivables, which would adversely affect our results of operations and financial condition.

Business interruptions or breaches of data security could disrupt our product sales and delay the development of our product candidates

Loss of manufacturing facilities, stored inventory or laboratory facilities, including those of third parties, through any natural disaster or man-made catastrophe, or loss of necessary raw materials, could have an adverse effect on our ability to meet demand for our products, to continue product development activities and to conduct our business. We currently

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have insurance coverage against such business interruptions; however, such coverage may prove insufficient to compensate us fully for damage to our business resulting from any significant property or casualty loss to inventory or facilities, which could have an adverse impact on our business, prospects, results of operations and financial condition.

In addition, we are increasingly dependent on information technology systems and infrastructure, including mobile technologies, to operate our business. In the ordinary course of our business, we collect, store and transmit large amounts of confidential information, including intellectual property, proprietary business information and personal information. It is critical that we do so in a secure manner to maintain the confidentiality and integrity of such confidential information.

We have also outsourced elements of our information technology and as a result manage a number of third-party vendors who have or could have access to our confidential information. The size and complexity of our information technology systems, and those of third-party vendors with whom we contract, make such systems potentially vulnerable to breakdown, malicious intrusion, security breaches and other cyber attacks, all of which would be costly to remedy. In addition, the prevalent use of mobile devices that access confidential information increases the risk of data security breaches, which could lead to the loss of confidential information, trade secrets or other proprietary information. While we have implemented security measures to protect our data security and information technology systems, such measures may not prevent the adverse effect of such events.

Failures of or disruptions to our systems or the systems of third parties on whom we rely, particularly if prolonged, could result in breaches of data security and/or a loss of key data which would adversely affect our reputation, business and results of operations.

Failure to comply, or the costs of complying, with environmental and health and safety regulations could adversely affect our operations

We are subject to regulation relating to the protection of the environment and health and safety, including regulations governing air emission, effluent discharge, and the use, generation, manufacture, storage, handling and disposal of certain materials. The cost and complexity of complying with such environmental and health and safety laws and regulations are substantial and failure by us to comply with such regulations or the costs incurred in doing so could have an adverse impact on our business, prospects, results of operations and financial condition.

Our insurance cover may not be adequate

Our business exposes us to potential product liability and professional indemnity claims and other risks which are inherent in the research, pre-clinical and clinical evaluation, manufacturing, sales and marketing and use of pharmaceutical products. We have taken out public and products liability insurance covering customary insurable risks in respect of such matters. Additional insurances taken out by us include property damage and business interruption, third party named suppliers, marine and cargo, directors’ and officers’ liability, clinical trials, employers’ liability and personal accident and travel.

While we believe that the cover in place is appropriate for a business of our current size and nature, there is no certainty that coverage limits and indemnity provisions will be adequate to cover all potential claims that could arise against us in the conduct of our business nor that claims will arise from insurable risks. In addition, there are areas where insurance cover, while potentially available, would carry premiums which are not commercially reasonable and/or may be difficult to obtain or maintain on commercially reasonable terms. A successful claim or claims against us in excess of or outside the ambit of our insurance coverage may have a material adverse effect on our business, prospects, results of operations and financial condition.

We are subject to on-going investigations and information requests which could have a significant effect on our business

We are currently subject to investigations, for example the on-going federal criminal grand jury investigation of Indivior initiated in December 2013 relating to marketing and promotion practices, pediatric safety claims and overprescribing of medication by certain physicians, including through subpoenas and other information requests, by various governmental authorities, the U.S. Federal Trade Commission (the “FTC”) investigation of Indivior initiated in late 2012 focusing on business practices relating to our core products, and the antitrust investigation into the same conduct being investigated by the FTC commenced in July 2013 by the Attorney General of the State of New York, which preceded a contingent of additional states also initiating a coordinated investigation.

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It is not possible at this time to predict with any certainty or to quantify the potential impact on us. We are however cooperating fully with the relevant agencies and prosecutors and will continue to do so.

If, as a result of these or any future investigations, we are found or suspected to have violated any applicable laws and regulations, we may be subject to a variety of fines, penalties, related administrative sanctions, potential exclusion from government healthcare program reimbursement or civil and/or criminal prosecution, any of which could have a material adverse effect on our reputation, business, financial condition and results of operations.

We are subject to on-going investigations with the U.S. Internal Revenue Service (the “IRS”)

We are under IRS audit for tax years 2010/2012 and also 2013/2014.  During these tax periods, we have claimed certain manufacturing deductions that the IRS had proposed to disallow in connection with the 2010/2012 audit cycle.  We believe the IRS will propose to disallow the deductions for the 2013/2014 cycle as well.  We believe that we have sufficient documentation to claim the deductions in all periods.  However, there is no guarantee that the IRS will agree with our submissions in this respect, which could result in us being required to repay part or all of the tax benefits relating to these deductions, along with related interest.  Such repayments and/or interest may exceed the amount of any provisions made by us with respect to these matters.

We may be subject to other audits or investigations from the IRS from time to time which may expose us to the risk of additional payments needing to be made or of previous tax benefits being disallowed, in each case along with accompanying penalties, if any and which could have a material adverse effect on our reputation, business, financial condition and results of operations.

We are exposed to risks related to currency exchange rates

We are incorporated in England and Wales but present our financial statements in U.S. dollars. While we conduct the majority of our operations in the United States, we also carry on business in Europe and Australia, among other places. As a result, our agreements with customers not based in the United States often involve payments denominated in currencies other than U.S. dollars, which creates foreign currency exchange risk. Our operating results are therefore subject to currency fluctuations on translating revenues and costs from those foreign currencies to U.S. dollars. Additionally, if in the future we expand our sales and operations into new markets (as we currently plan to do), with different currencies, this could expose us to additional currency translation risks.

To the extent that we do not hedge our exposure to foreign currency exchange rate fluctuations, or to the extent that such hedging is inaccurate or otherwise ineffective, such exposure could have an adverse effect on our business, financial condition and results of operations.

Exchange rate fluctuations between local currencies and the U.S. dollar also create risk in other ways, including but not limited to: (i) increasing the U.S. dollar cost of non-U.S. research and development expenses and the cost of sourced product components outside the United States (in the case of a weakening of the U.S. dollar); (ii) decreasing the value of our revenues denominated in other currencies (in the case of a strengthening of the U.S. dollar); (iii) distorting the value of non-U.S. dollar transactions and cash deposits; and (iv) affecting commercial pricing and profit margins of our products. These effects can have an adverse impact on our results of operations and financial condition and may also make it more difficult for investors to understand the relative strengths or weaknesses of our underlying business on a period-over-period comparative basis.

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of the ADSs.

Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. In addition, any testing by us, as and when required, conducted in connection with Section 404 of the Sarbanes-Oxley Act, or Section 404, or any subsequent testing by our independent registered public accounting firm, as and when required, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of the ADSs.

Pursuant to Section 404, we will be required to furnish a report by our management on our internal control over financial

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reporting.  We will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm until our second annual report following listing. To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude within the prescribed timeframe that our internal control over financial reporting is effective as required by Section 404. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

If we lose our foreign private issuer status in the future, we may incur significant additional expenses

On June 14, 2016, not more than 50% of our ordinary shares were held by shareholders resident in the United States. We qualify as a “foreign private issuer” (within the meaning of Rule 405 of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 3b-4 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second financial quarter. Accordingly, we will next make a determination with respect to our foreign private issuer status on June 30, 2017. There is a risk that we could lose our foreign private issuer status if, for example, more than 50% of our issued ordinary share capital is held by U.S. residents. If we lose our foreign private issuer status, we would be required to file reports with the U.S. Securities and Exchange Commission (the “SEC”) as a “domestic issuer” and comply with SEC rules applicable to such issuers beginning January 1, 2018. As a result, we would become subject to the extensive periodic and on-going disclosure and reporting requirements under the U.S. securities laws that apply to domestic issuers, including preparing consolidated financial statements in accordance with U.S. generally accepted accounting principles (in addition to those prepared in accordance with IFRS as required by the listing rules made by the UK Listing Authority under the UK Financial Services and Markets Act 2000 (as set out in the UK Financial Conduct Authority’s Handbook of Rules and Guidance), as amended (the “Listing Rules”)), and preparing quarterly financial statements. We would also be subject to the proxy statement requirements under Section 14 of the Exchange Act, and our officers, directors and principal shareholders would be subject to the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act.

If we are required to report as a domestic issuer, we may incur additional expenses which could have an adverse effect on our results of operations.

The result of the referendum in the United Kingdom on whether to remain in the European Union could have an impact on our business, financial condition and results of operations.

The United Kingdom has voted in an advisory referendum to leave the European Union (commonly referred to as “Brexit”). The follow up to the referendum is not yet clear, but it may significantly affect the fiscal, monetary and regulatory landscape in the United Kingdom, and could have a material impact on its economy and the future growth of its various industries, including the pharmaceutical and biotechnology industries. Depending on the terms negotiated between EU member states and the United Kingdom following Brexit, the United Kingdom could lose access to the single European Union market and to the global trade deals negotiated by the European Union on behalf of its members.  Such a decline in trade could affect the attractiveness of the United Kingdom as an investment center and, as a result, could have a detrimental impact on corporate growth.  This may impact our ability to access funding in the future. Although it is not possible at this point in time to predict fully the effects of an exit of the United Kingdom from the European Union, it could have a material adverse effect on our business, financial condition and results of operations. In addition, it may impact our ability to comply with the extensive government regulation to which we are subject, and impact the regulatory approval processes for our product candidates.

RISKS RELATING TO THE INDUSTRY

We operate in a highly competitive industry, which includes companies with greater resources, including larger sales organizations and more experience working with large and diverse product portfolios, than us

The manufacture and sale of pharmaceuticals is highly competitive. Many of our competitors are large, prominent pharmaceutical, biotechnology, chemical and healthcare companies that have substantially greater financial, operational and human resources than we do. Companies with more extensive resources and larger research and development expenditures have a greater ability to fund clinical trials and other development work necessary for regulatory applications and there is a risk that our competitors may launch competing products before we are able to complete all of the regulatory milestones required to launch our own product. Competitors may also have a greater ability to offer higher rebates, discounts, chargebacks or other incentives to gain commercial advantage, and may be more successful than us in acquiring or licensing new products for development and commercialization. Smaller or earlier stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. If any product that competes with one of our products or product candidates is approved, our sales of that product could decrease, the effect of which would be heightened by our product and geographic concentration, which could have an adverse impact on our business, prospects, results of operations and financial condition.

In addition, many pharmaceutical companies are able to deploy more personnel to market and sell their products than us. We currently have a relatively small number of sales representatives compared with the

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number of sales representatives of most other pharmaceutical companies with marketed products. Each of our sales representatives is responsible for a territory of significant size. The continued growth of our current products and the launch of any future products may require expansion of our sales force and sales support organization internationally and we may need to commit significant additional funds, management and other resources to the growth of our sales organization. We may not be able to achieve any such necessary growth in a timely or cost-effective manner or realize a positive return on our investment and we may not have the financial resources to achieve the necessary growth in a timely manner or at all. We also have to compete with other pharmaceutical and life sciences companies to recruit, hire, train and retain sales and marketing personnel and turnover in our sales force and marketing personnel could negatively affect sales of our products. If our sales force and sales organization are not appropriately sized to promote any current or potential future products adequately, the commercial potential of our current products and any future products may be diminished, which could materially adversely affect our business, prospects, results of operations and financial condition.

The pharmaceutical and biotechnology industries are also characterized by continuous product development and technological change. Our products could, therefore, be rendered obsolete or uneconomic through the development of new products or by technological advances in manufacturing or production by our competitors. We must therefore compete with other pharmaceutical and life sciences companies to recruit, hire, train and retain research and development personnel. Significant turnover in our research and development personnel compared to our competitors could negatively affect our ability to formulate and commercialize new products, which could have a material adverse effect on our business, prospects, results of operations and financial condition.

Among other things, competition could continue to require us to increase further the level of rebates and other offsets to gross sales, particularly in our U.S. operations, and could impact potential volume growth of any particular product, which could reduce our net revenues and therefore our results of operations in future periods. Any of the foregoing could have a material adverse effect on our business, prospects, results of operations and financial condition. We are dependent on a relatively small number of significant customers for a substantial proportion of our net revenues, and the loss of a significant customer, a significant reduction in purchase volume by, or an adverse change in the creditworthiness of, any such customer could have a material adverse effect on our business, prospects, results of operations and financial condition

The pharmaceutical industry is subject to significant on-going regulatory obligations and oversight, which may result in significant additional expense and potential liability

The pharmaceutical industry is subject to significant on-going regulatory obligations which are becoming increasingly stringent, such as safety reporting requirements, additional post-marketing obligations and regulatory oversight of the promotion and marketing of its products. In addition, the manufacture, quality control, labelling, packaging, safety surveillance, adverse event reporting, storage, advertising, promotion and record-keeping for its products are subject to extensive and on-going regulatory requirements.

If we become aware of previously unknown problems or potential safety risks associated with any of our products, a regulatory agency may impose restrictions on our products, our contract manufacturers or on us. If we, our products and product candidates, or the manufacturing facilities for its products and product candidates, fail to comply with applicable regulatory requirements, regulatory agencies have wide-ranging powers of enforcement, including the power to impose monetary penalties. In such instances, we could experience a significant drop in the sales of the affected products, our product revenues and reputation in the marketplace may suffer, and it could become the target of lawsuits, each of which could have a material adverse effect on our business, prospects, results of operations and financial condition.

We are also subject to various U.S. federal and state healthcare laws and regulations, including anti-kickback, false claims, anti-bribery, privacy and other laws intended to reduce fraud and abuse in federal and state healthcare programs. Moreover, there are some laws and regulations that apply even in the absence of a government payor, and there are laws and regulations that require manufacturers to implement compliance programs or marketing codes of conduct that require tracking and reporting of expenses relating to the marketing and promotion of products, and certain state laws that prohibit certain marketing-related activities. Violations of various federal and state laws may be punishable by significant criminal, civil and/or administrative sanctions and penalties, including fines, damages and/or exclusion or suspension from federal and state healthcare programs such as Medicare and Medicaid and debarment from contracting with the U.S. government. In addition, private individuals have the ability, under certain circumstances, to bring actions on behalf of the government under the federal civil False Claims Act as well as under the false claims laws of many states.

In addition, we are subject to foreign equivalents of the healthcare laws described above, among others, including in the EU laws prohibiting giving healthcare professionals any gift or benefit in kind as an inducement to prescribe our products, and national transparency laws requiring the public disclosure of payments made to healthcare professionals and institutions.

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As a result of the breadth of these laws and regulations and the lack of definitive legal guidance in certain areas, it is possible that some of our business activities could be subject to challenge. Such challenges, irrespective of the underlying merit or the ultimate outcome of the matter, could have a material adverse effect on our business, prospects, reputation, results of operations and financial condition.

Changes in healthcare law in the United States and implementing regulations, including those based on recently enacted legislation, as well as changes in healthcare policy, may impact our business in ways that we cannot currently predict

The U.S. Patient Protection and Affordable Care Act, as amended by the U.S. Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”), enacted in 2010, contains a number of provisions that are expected to continue to impact our business and operations; in some cases the longer term effects of some of its provisions on us may still be unknown. Changes that may affect our business include those governing enrollment in federal healthcare programs, the imposition of an annual fee on branded prescription pharmaceutical manufacturers and increased rebates payable to state Medicaid programs, rules regarding prescription drug benefits under the health insurance exchanges, changes in the Medicare Part D coverage gap (whereby we are required to provide a 50% discount on branded prescription drugs dispensed to beneficiaries within this coverage gap), expansion of the drug pricing program under Section 340B of the Public Health Services Act of 1944, as amended, (the “340B Program”), and new provisions regarding fraud and abuse and enforcement. There are a number of other provisions in the legislation that have still not been addressed by the implementing agency and their potential effect is unknown, including an alternative unit rebate calculation for new formulations. These changes will impact existing government healthcare programs and will result in the development of new programs.

The U.S. Supreme Court has struck down a provision of the Affordable Care Act that penalized states that chose not to expand their Medicaid programs. As a result, some states have elected not to expand their Medicaid programs. For each state that does not choose to expand its Medicaid program, there may be fewer insured patients overall, which could impact our sales, business and financial condition. Where patients receive insurance coverage under an expanded Medicaid program authorized by the Affordable Care Act, pharmaceutical companies are required to pay Medicaid rebates on drugs used for these patients, which could impact revenues.

Moreover, legislative changes to the Affordable Care Act remain possible, particularly as a result of the election of a new U.S. administration. We expect that the Affordable Care Act, as currently enacted or as it may be amended in the future, and other healthcare reform measures that may be adopted in the future, could have a material adverse effect on our industry generally and on our ability to maintain or increase our product sales and/or product prices or successfully commercialize our product candidates, which could adversely affect our business, prospects, results of operations and financial condition.

Failure to comply with payment and reporting obligations under the Medicaid Drug Rebate program or other governmental pricing programs in the United States could result in additional reimbursement requirements, penalties, sanctions and fines

In the United States, we participate in the Medicaid Drug Rebate and Medicare Part D programs and, by virtue of such participation, are also required by federal law to participate in the 340B Program and Federal Supply Schedule pricing program. These programs require us to pay certain rebates based on pricing data, such as (among others) average manufacturer price and best price, reported by us to the various federal agencies administering the programs.

Pricing and rebate calculations vary among products and programs. The calculations are complex and the calculation methodology is often subject to interpretation by us, governmental or regulatory agencies and the courts. If we become aware that our reporting for a prior period was incorrect, or has changed as a result of recalculation of the pricing data, we are obliged to resubmit the corrected data. Such restatements and recalculations increase our costs for complying with the laws and regulations governing the various programs. Any corrections to our rebate calculations could result in either additional or reduced rebate liability for past periods, depending on the nature of the correction. Price recalculations may also affect the ceiling price at which we are required to offer our products to certain covered healthcare entities, such as safety-net providers, under the 340B Program as well as the prices under which our products are made available to federal government purchasers such as the U.S. Department of Veterans Affairs and the Department of Defense under the Veterans Health Care Act of 1992, as amended (“VHCA”).

We are liable for errors associated with our submission of pricing data. In addition to retroactive rebates and the potential for 340B Program and VHCA refunds, if we are found to have knowingly submitted false average manufacturer price or best price information to the government, we may be liable for civil monetary penalties. Any failure to submit data on a timely basis could result in a civil monetary penalty for each day the information is late beyond the due date. In the case of the Medicaid Drug Rebate program, such failure could also be grounds for Centers for Medicare and Medicaid Services (“CMS”) to terminate our Medicaid drug rebate agreement, pursuant to which we participate in the Medicaid program. In the event that CMS terminates our rebate agreement, no federal payments would be available under Medicaid for our covered outpatient drugs.

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CMS and the Office of the Inspector General have previously indicated that they intend more aggressively to pursue companies who fail to report pricing data to the government in a timely manner. Governmental agencies may also make changes in program interpretations, requirements or conditions of participation, some of which may have implications for amounts previously estimated or paid. There can be no assurance that our submissions will not be found by CMS or any other government agency to be incomplete or incorrect.

Any of the foregoing could have a material adverse effect on our business, prospects, results of operations and financial condition.

We may be subject to adverse public opinion

The pharmaceutical industry is frequently subject to adverse publicity on many topics, including product recalls and research and discovery methods, as well as to political controversy over the impact of novel techniques and therapies on humans, animals and the environment. We produce synthetic narcotics which can cause death if used improperly and our products are inherently prone to the health and safety risks arising from their misuse and diversion. Negative publicity about us or our products, or any other part of the industry, may adversely affect our public image, which could impact our operations, impair our ability to gain market acceptance for our products or lead to government intervention, which in turn could have an adverse impact on our business, prospects, results of operations and financial condition.

Failure to comply with anti-corruption laws and regulations could result in us becoming subject to fines or penalties

In the United Kingdom, we are subject to anti-money laundering regulations and other anti-corruption laws, including the Bribery Act 2010. In the United States, we are also subject to anti-money laundering laws and regulations, including the Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”). Any variation or addition to these regulations, either in the United Kingdom or the United States, could impose significant compliance costs on us.

We have mechanisms in place to ensure that we comply with applicable anti-corruption and anti-money laundering regulation. Our compliance procedures are overseen by the Nomination & Governance Committee which monitors our policies, procedures and controls for preventing bribery and money laundering. We have also established a global compliance program applicable to all employees, consultants, sub-contractors and agents. In addition, our business partners must, annually, certify compliance with our Code of Business Conduct.

There can also be no assurance that our required policies and procedures will be followed at all times or will effectively detect and/or prevent violations of applicable compliance regimes by our employees, consultants, sub-contractors, agents and partners. As a result, in the event of non-compliance, we could be subject to fines and/or penalties, damage to our reputation and resulting loss of revenue and profits, which could have a material adverse impact on our business, financial conditions and operations.

Additionally, we are also subject to rules and regulations imposed by, amongst others, HM Treasury and the U.S. Department of the Treasury’s Office of Foreign Assets Control and economic sanctions programs, including those administered by the United Nations and the European Union, which could restrict our business dealings, particularly regarding watch lists published by such bodies restricting the transfer of funds to certain specifically designated countries, which will continue to restrict our dealings. There can be no guarantee that our controls are, or will continue to be, effective and any sanctions imposed by any regulatory body on us for executing a transfer to a country on a watch list could have a material adverse effect on our results of operations, financial condition and future prospects.

RISKS RELATING TO THE DEMERGER

Following the Demerger, we have been and will continue to be reliant on the RB Group for the provision of certain services, continue to have certain obligations in favor of RB and remain subject to a risk of on-going liabilities resulting from the Demerger

Following the Demerger, we have continued to be reliant on the RB Group for the provision of certain services, have certain obligations in favor of the RB Group and are subject to a risk of on-going liabilities resulting from the Demerger, including:

·                   We continue to rely on the RB Group for the provision of certain services including various head office, IT, manufacturing and distribution and detailing services. The duration of the provision of these services varies depending on a number of factors relating to us. If the RB Group fails to provide the expected

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services in whole or in part, or at the required service level or in a timely manner and it becomes necessary to find a replacement provider of any or all of such services at short notice, we could experience difficulty, disruption and increased operating costs which may be exacerbated by the restrictions of operating in a highly regulated industry, which in turn could have an adverse impact on our business, prospects, results of operations and financial condition.

We incurred potentially significant indemnity obligations to RB in connection with the Demerger, as described more fully below.

·                   The Demerger may give rise to unanticipated tax consequences in the future if the tax authorities in each jurisdiction in which we have a taxable presence do not interpret or apply the relevant tax law and practice in the manner in which we anticipate, which may adversely affect our results of operations and financial condition.

·                   The Demerger could result in significant tax liability to the RB Group if the Demerger were determined not to qualify as a tax-free transaction for U.S. federal income tax purposes, which could happen if, inter alia , we or our shareholders were to engage in certain transactions after the Demerger. We could be required to indemnify RB for any resulting taxes and related expenses which could be material.

·                   At the time of the Demerger, we agreed to certain restrictions to preserve the treatment of the Demerger as tax-free to RB and its shareholders, which reduces the strategic and operating flexibility of the Indivior Group. Specifically, under the U.S. Tax Matters Agreement, we are generally prohibited, except in specified circumstances, for specified periods of up to 24 months following the Demerger, from:

·                                           issuing, redeeming or being involved in other significant acquisitions of equity securities of the Indivior Group;

·                                           transferring significant amounts of the assets of the Indivior Group;

·                                           ceasing to engage in the active conduct of a trade or business; or

·                                           engaging in certain other actions or transactions that could jeopardize the tax-free status of the Demerger.

In connection with the separation from RB, we and RB incurred potentially significant indemnity obligations. If we are required to act on these indemnities to RB, we may need to divert cash to meet those obligations, which could have a material adverse effect on our business, results of operations and financial condition. In the case of RB’s indemnity, there can be no assurance that the indemnity will be sufficient to insure us against the full amount of such liabilities or that RB will be able to satisfy its indemnification obligations in the future

Pursuant to the Demerger Agreement, the Demerger Tax Deed and the U.S. Tax Matters Agreement, we indemnified RB in respect of any claims and expenses of or incurred by any company within the Indivior Group or the RB Group arising out of or associated with our business prior to the Demerger (whether or not in the ordinary course of business) and in respect of certain tax liabilities that may arise as part of the Demerger or in relation to our business including for taxable years prior to the Demerger. The RB Group may also have a claim against us in connection with the current litigation and regulatory proceedings in which we are involved or on-going tax audits. Some of these indemnities are unlimited in terms of amount and duration and the amounts payable by us pursuant to such indemnity obligations could be significant and may not be covered by provisions made by us and could have a material adverse effect on our business, financial condition and/or operating results.

For example, under the U.S. Tax Matters Agreement that we entered into with RB in connection with the Demerger, we agreed generally to indemnify RB for taxes and related losses it suffers as a result of the Demerger or the internal restructuring failing to qualify as a tax-free transaction (including such taxes of any third party for which any member of the RB Group is or becomes liable), if the taxes and related losses are attributable to:

·                                           direct or indirect acquisitions of shares or assets of the Indivior Group (regardless of whether we consent to such acquisitions);

·                                           negotiations, understandings, agreements or arrangements in respect of such acquisitions; or

·                                           our failure to comply with certain representations and undertakings, including the restrictions described in the preceding risk factor.

The indemnity provided by us under the U.S. Tax Matters Agreement covers corporate level taxes and related losses

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imposed on the RB Group in the event of a 50% or greater change in the share ownership of Indivior among other events that are prohibited during the specified periods of up to 24 months following the Demerger, as described in the preceding risk factor, as well as taxes and related losses imposed on RB if, due to our representations or undertakings being incorrect or violated, the Demerger or the internal restructuring is determined to be taxable for other reasons. In addition, we agreed to indemnify RB for certain potential U.S. tax liabilities relating to taxable years prior to the Demerger.

Indemnities that we may be required to provide to RB may be significant and could have a material adverse effect on our business, results of operations and financial condition, particularly indemnities relating to certain actions that could impact the tax-free nature of the internal restructuring and the Demerger. Further, there can be no assurance that the indemnity from RB to Indivior under the U.S. Tax Matters Agreement will be sufficient to protect us against the full amount of such liabilities, or that RB will be able to fully satisfy its indemnification obligations. Moreover, even if we ultimately succeed in recovering from RB any amounts for which we are held liable, we may be temporarily required to bear these losses. Each of these risks could have a material adverse effect on our business, results of operations and financial condition.

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We launched SUBUTEX ®  Tablet and SUBOXONE ®  Tablet in the United States in 2003, following FDA approval in October 2002. In August 2010, the FDA approved SUBOXONE ®  Film (buprenorphine/naloxone) sublingual film, which succeeded in capturing 69% of the U.S. market for buprenorphine-based opioid dependence treatment by May 2013, based on volume of prescribed milligrams.

In the United States, between October 2009 and July 2011, three manufacturers launched generic versions of SUBUTEX ®  Tablet, leading to market share erosion of SUBUTEX ®  Tablet. This, alongside its potential for abuse in comparison with buprenorphine-naloxone formulations, prompted the Indivior Group to discontinue distribution of SUBUTEX ®  Tablet in the United States in September 2011.

In addition, two generic buprenorphine and naloxone tablets (generic equivalents of SUBOXONE ®  tablet) entered the market in March 2013, a branded buprenorphine and naloxone tablet entered the market in September 2013, a third and fourth generic buprenorphine and naloxone tablet entered the market in August 2014 and January 2015, respectively and a fifth generic buprenorphine/naloxone tablet came into the market at the end of 2015 marketed by Akorn Inc. (formerly Hi-Tech). Despite the launch of these generic formulations and branded competition, SUBOXONE ®  Film has been able to maintain a share of approximately 60% of the buprenorphine-based opioid dependence treatment market (by mg volume) over the last three years.

We announced that we were discontinuing distribution of SUBOXONE ®  Tablet in the U.S. market in September 2012 owing to pediatric safety concerns. In order to ensure continuity in patient treatment, and to provide adequate time for consultation with regulatory bodies and treatment stakeholders, withdrawal did not occur until March 2013.

In April 2013, SUBOXONE ®  Film received FDA approval for an expanded indication for use in the induction phase of treatment in certain patients. SUBOXONE ®  Film is one of only two buprenorphine and naloxone-based film products approved for use in this phase of treatment, although SUBOXONE ®  Film has a market share 10 times greater than that of the alternative. In addition, on September 22, 2015 the FDA approved the buccal route of administration for SUBOXONE ®  Sublingual Film. Patients may now choose either under-the-tongue (sublingual) or against the cheek (buccal) administration.

In the EU, generic versions of SUBUTEX ®  Tablet have been available for more than six years; but our branded SUBUTEX ®  Tablet currently maintains a market share of approximately 60% (by mg volume) of the mono-buprenorphine market, giving the Indivior Group a total market share (mono-buprenorphine and buprenorphine/naloxone) of approximately 69%.

Our capital expenditures for 2015, 2014 and 2013 amounted to $27 million, nil and $3 million, respectively. These expenditures were primarily for the development of our ERP system, new equipment in research and development laboratories and building refits. Our current capital expenditures are primarily for continued development of our ERP system and design and implementation of our research and development facility in Hull and we expect to finance these expenditures primarily from cash on hand. Purchase of intangible assets for 2015, 2014 and 2013 amounted to $4 million, $26 million and nil, respectively. In 2014, the intangible assets purchase of $26 million related to Nasal Naloxone rights and the in-licensing of arbaclofen placarbil for the treatment of alcohol use disorders. In 2015, $4 million related to the outright purchase of the Nasal Naloxone technology during the year.

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B.                                     Business Overview

Background

We are a global specialty pharmaceutical business and are currently the global leader in the treatment of opioid dependence, with 20 years’ experience in that field. Our business was historically developed and managed as a separate division of the RB Group, before being demerged in December 2014, following which we have operated as a standalone business. Our core marketed products are described below:

Our core products, which are currently sold in 42 countries, comprise SUBOXONE ®  Film (buprenorphine and naloxone) sublingual film, SUBOXONE ®  Tablet (buprenorphine and naloxone) sublingual tablet, and SUBUTEX ®  Tablet (buprenorphine) sublingual tablet, all of which are treatments for opioid dependence. The opioid dependence treatment market in the United States is our key market and sales of SUBOXONE ®  Film in the United States represented 80% of our net revenues in 2015.  SUBOXONE ®  Film had a market share of approximately 59% in the United States market for buprenorphine-based opioid dependence treatment (based on volumes of prescribed milligrams) in 2015.

Our key pipeline asset within our opioid addiction treatment franchise is Buprenorphine Monthly Depot (RBP-6000), which we are actively developing over the medium-term with a view to launching in the United States in 2018, subject to having received FDA approval. We are committed to delivering innovative, high quality treatments designed to address the chronic relapsing conditions and co-morbidities of addiction and, to the extent that cash flows permit, plans in the longer term to expand the range of products beyond our core opioid dependence treatment business. In addition to extension candidates for opioid dependence treatments, we have a pipeline of new drug candidates for the treatment of alcohol dependence, cocaine intoxication, schizophrenia and opioid overdose.

We also sell small amounts of two ‘legacy products’: TEMGESIC ®  sublingual tablets and injections outside the United States for the treatment of moderate to severe pain, and BUPRENEX ®  injection in the United States for the relief of moderate to severe pain. There is no current or planned marketing activity to support TEMGESIC ®  or BUPRENEX ® , and these products comprised 2.3% of our net revenues in 2015.

In addition, we supply buprenorphine to Otsuka Pharmaceutical Co. Ltd. for use in the manufacture of buprenorphine injection and suppository products, which Otsuka promotes in Japan under the brand name LEPETAN ® .

Our core geographic market (based on the country where the sale originates) is the United States, which accounted for 80% of net revenues in the year ended December 31, 2015 (2014: 77%; 2013: 78%) and 82% in Q1 2016.

Industry overview

Opioid dependence

Addiction is a growing public health problem globally which still carries the “disease stigma” in many countries, being perceived as a moral failing and sign of personal weakness rather than a chronic and relapsing disease affecting the brain, which can be manageable and responsive to treatment. As a consequence, we believe coherent action to deal with sufferers and addiction is generally lacking.

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The number of opioid-dependent individuals in the United States has grown over the last few years, reaching an estimated 2.5 million people in 2014.

The enactment of DATA 2000 was a significant development in the history of addiction treatment in the United States. Previously, treatment options for opioid dependence were limited: abstinence-based programs had a high rate of relapse and methadone clinics (the only medication-assisted treatment option) were unpopular with opioid-dependent individuals owing to the significant associated societal stigma. As a result, many opioid-dependent individuals remained untreated.

Under DATA 2000, office-based physicians who had completed appropriate training were able to obtain a federal waiver to treat up to 30 opioid-dependent patients with opioid medications classified by the DEA as controlled substances within Schedules III, IV, and V of the CSA that were specifically approved by the FDA for that indication, and to prescribe and/or dispense these medications in their office-based settings. By permitting treatment for opioid dependence in the privacy of physicians’ offices, DATA 2000 was significant in creating access to treatment and medicalizing the condition in the same way as other chronic diseases.

In 2007, the patient cap under DATA 2000 was increased from 30 to 100 patients for physicians with at least one year’s clinical experience with buprenorphine, further increasing access for patients seeking treatment in the privacy of a physician’s office. Even so, fewer than an estimated one in five opioid-dependent individuals currently receive buprenorphine-based treatment for opioid dependence for reasons including a lack of financial coverage, fear of being stigmatized owing to societal attitudes towards the disease, low awareness of treatment options and limited access to treatment in several areas of the United States.

The European market is smaller than the U.S. market with an estimated 1.3 million opioid-dependent individuals, the majority of whom are heroin users. The European market is relatively mature with numbers of patients in treatment being largely stable over the last five years. There are currently approximately 700,000 patients in treatment, but there is also an emerging patient population of opioid analgesic-dependent patients who are currently under-diagnosed. Initial estimates, which we believe are conservative, suggest that in 2013 there were potentially over 300,000 individuals dependent on prescription opioid analgesics in the United Kingdom, France, Germany, Spain, Italy and the Nordic countries.

Treatment methods in the EU differ from the United States. While U.S. patients can obtain a 30-day prescription and self-administer treatment prescribed by a treating physician, supervised dosing in the EU means a daily visit to the clinic for many patients. Methadone and generics are also generally more broadly available as social funding puts pressure on prices, and treatment is more highly regulated with limited direct-to-patient promotion. However, the harm reduction mindset is now changing towards recovery and the EU has begun to recognize the need to implement treatment systems that allow patients to return to a more normal lifestyle.

In the rest of the world it is estimated that there are approximately 27 million people aged 15 to 64 who suffer from drug use disorders or drug dependence. Treatment services are generally very underdeveloped (with the exception of Australia and New Zealand), the key challenge being to convince governments to treat addiction as a chronic medical disease rather than a social disorder.

According to the Australian National Council on Drugs, as at 2015 approximately 48,500 patients are treated annually for opioid dependence in Australia.  There is increasing awareness among healthcare providers in Australia of the misuse of opioid analgesics and the need for treatment. Recent policy changes to address this concern in Australia include re-classifying products containing codeine so that they must be dispensed by a pharmacist rather than over the counter.

We believe that there is an opportunity for us to extend the SUBOXONE ®  franchise to China, where it is believed that there are a large number of opioid-dependent individuals who are not receiving treatment. As at 2014, there were an estimated 7.3 million total opioid dependent people in China, including 1.4 million registered patients.

Schizophrenia

Schizophrenia is a chronic disorder characterized by a life-long pattern of acute psychotic episodes superimposed upon chronically poor psychosocial adjustment. The symptoms can be grouped into four domains: positive symptoms (for example, delusions, hallucinations, disorganized speech and behavior); negative symptoms (for example, social withdrawal, avolition, blunted effect); cognitive symptoms (for example, impaired sustained attention, executive function and working memory) and affective symptoms (for example, anxiety and depression, hostility and aggression, increased risk of suicide). These occur in different combinations and to a different degree in each patient. Given the extensive heterogeneity of symptoms among individual patients, schizophrenia can be considered a clinical syndrome rather than a single disease entity.

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Schizophrenia affects 1.1% of the U.S. adult population.  Adherence is a major problem leading to relapse and often hospitalization.  Between 20-40% of schizophrenia patients attempt suicide and between 5-13% actually die of suicide.  Schizophrenia is responsible for an annual $37.7 billion in direct healthcare costs in the United States.  The primary treatments for schizophrenia are anti-psychotic medicines, which are a large and established market with over $12 billion in U.S. sales in 2014.  Long-acting injectable (LAI) antipsychotics make up annual sales of $2.4 billion in the United States and are growing robustly at a compound annual growth rate of approximately 24% over the past five years.  Treatment of schizophrenia drives a majority of LAI prescriptions, and Risperidone is the most commonly used antipsychotic used to treat schizophrenia.

Epidemiological and clinical studies have shown that psychiatric disorders, including borderline and antisocial personality disorders, bipolar, psychotic, depression and anxiety disorders are highly co-morbid with substance use disorders, a condition referred to as “dual” or “co-occurring” disorders. The presence of co-occurring conditions increases severity and complicates recovery from addiction, and a natural outgrowth of increased severity is to recognize a multidisciplinary and holistic approach to the treatment of patients suffering from substance use disorders.

Our key pipeline product designed for the treatment of schizophrenia is RBP-7000 for which we published positive clinical data for the Phase III efficacy trial in May 2015. This product is a monthly depot formulation of risperidone, the most widely prescribed compound for the treatment of schizophrenia.

Other industry areas

The other industries and areas of addiction in relation to which we have products in development are as follows:

Alcohol dependence

Harmful use of alcohol contributed to approximately 3.3 million deaths globally in 2012. An estimated 5% of the global burden of disease is attributable to alcohol consumption. Alcohol is also associated with significant societal costs, including those related to violence, child neglect and abuse, and absenteeism in the workplace. Therapeutic approaches, including pharmacotherapy, play a pivotal role in treating patients with alcohol use disorders but are commonly underutilized.

Cocaine intoxication

Cocaine abuse and its complications represent significant public health issues in the United States. Cocaine is the second most commonly used illicit drug in the United States with a rate of 88 per 100,000 population for Disability Adjusted Life Years due to cocaine dependence.  Cocaine is also the most common illicit drug involved in emergency room (ER) visits. It is estimated that between 66,000 and 116,000 of cocaine-related ER visits may represent severe cocaine intoxication. Nearly a quarter of all patients with cocaine-related visits are admitted to hospital, including 3% who are admitted to a critical care unit. Cost estimates from U.S. private payors and New Jersey Medicaid suggest emergency room costs of approximately $800-$1000 per visit and an additional $4,200-$8,600 per admission.

K ey strengths

We believe that our key strengths include the following:

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SUBOXONE ®  is the leading opioid dependence treatment franchise

WHO indicates that buprenorphine is an essential medication for the treatment of opioid dependence. In the United States, approximately 60% of patients receiving medication-assisted treatment for opioid dependence are treated with buprenorphine. Under DATA 2000, only buprenorphine-based products have been approved for office-based treatment of opioid dependence by certified physicians in the United States. Following the successful introduction of SUBOXONE ®  Tablet, the Indivior Group developed a film formulation which we believe provides a significant benefit for patients, physicians, payors and regulators. SUBOXONE ®  Film dissolves faster than SUBOXONE ®  Tablet and each individual SUBOXONE ®  Film is packaged in a unit-dose child-resistant pouch. Surveys we conducted showed that over 90% of patients surveyed were satisfied with SUBOXONE ®  Film, and in a 2013 survey of 269 physicians who treat opioid dependence, 97% were satisfied or very satisfied and 85% rated SUBOXONE ®  Film as a leading medication for the treatment of opioid dependence. In 2015, 818,811 unique patients received SUBOXONE® Film, an increase from 802,732 patients in 2014.

We have also created a tailored managed care strategy to drive payor acceptance of SUBOXONE ®  Film, with emphasis on the physician-patient relationship, the high societal cost of opioid dependence, the pharmacoeconomic benefit of treatment and abuse deterrence combined with competitive economic incentives through rebates. We believe the strength of the SUBOXONE ®  franchise is demonstrated by its favorable formulary position, as well as by SUBOXONE ®  Film’s market share of approximately 60% of the U.S. buprenorphine-based opioid dependence treatment market, despite the entry of both generic and branded tablet competition.

We believe that our intellectual property protection is robust. With respect to SUBOXONE ®  Film, we have a patent portfolio consisting of formulation patents, process patents and pending patent applications relating to the product. In the United States, we have three listed patents included in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (which lists drug products approved on the basis of safety and effectiveness by the FDA) covering SUBOXONE ®  Film, with the latest expiring patent providing protection until March 2030.

Our key pipeline product, Buprenorphine Monthly Depot (RBP-6000), will operate in attractive high growth markets for the treatment of opioid dependence

The opioid dependence treatment market in the United States is our key market representing 80% of our net revenues in 2015 (77% in 2014) and 82% in Q1 2016 (80% in Q1 2015) and has experienced consistent growth over the past two years. We believe that the market continues to remain under-penetrated: there are approximately 2.5 million opioid-dependent individuals in the United States, but fewer than one million receive medication-assisted treatment. It is estimated that in 2014 there were 10.3 million individuals misusing prescription opioids in the United States.

We believe there are no signs that the incidence of opioid dependence is slowing. While strict regulations have been implemented aimed at limiting the availability of opioid prescription analgesics to reduce abuse and diversion, those struggling with addiction continue to find alternative opioid options. Progress continues to be made towards medicalizing opioid dependence as a chronic, relapsing condition that should be treated similarly to other chronic diseases, such as diabetes. As a result, there is improved definition of opioid dependence, increased education and certification of physicians and availability of new treatment options, all of which we believe will likely serve to drive market growth. Importantly, an increasing number of payors have begun to recognize the pharmacoeconomic benefit of treatment, considering that for every $1 spent on treatment, up to $12 is saved in societal costs (according to a 2004 WHO report), while the societal costs of opioid misuse are estimated to be approximately $55 billion.  For the reasons outlined above, the U.S. opioid dependence market is expected to grow. Considering the high number of opioid-dependent individuals in several other jurisdictions around the world, we further believe that there is also a significant opportunity to grow our business outside the United States.

In addition, considering the high number of opioid-dependent individuals in several other jurisdictions around the world, as described in “Item 4.B. —Industry Overview,” we further believe that there is also a significant opportunity to grow our business outside the United States.

Innovative product development driven by a strong scientific platform with demonstrable success in the opioid dependence market

Our business launched the first buprenorphine-based product for the opioid dependence treatment market in 1996 and continues to lead that market after 20 years. We believe that our strong position in the opioid dependence market derives from our strong global research and development team which capitalizes on significant and specialized scientific expertise and knowledge of the brain disease model of behavioral disorders to deliver treatments for the chronic relapsing conditions and co-morbidities of addiction. Our research and development team is led by the Chief Scientific Officer, Dr. Christian Heidbreder, a leading authority on the development of addiction treatments. As at the date of this document, it consisted of 180 personnel.

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Our development of the SUBOXONE ®  Tablet and SUBOXONE ®  Film formulations are examples of our team’s ability to identify a market need and to successfully bring innovative addiction treatments to market. The research and development team has significant regulatory experience and, as a precursor to the regulatory approval of SUBOXONE ®  Film in the United States in 2010, successfully completed 21 clinical studies in 18 months.

Proven ability to successfully extend product franchises through active life-cycle management

We believe that our leading position in the treatment of opioid dependence and our effective engagement with stakeholders improves our ability to anticipate and identify market and public health trends that can reveal unmet treatment needs. We believe that our global research and development function, clinical development capability and regulatory expertise well positions us to innovate and to develop products designed to address unmet needs, to extend our franchises, strengthen our intellectual property estate and to drive evolution in treatment.

The introduction of SUBOXONE ®  Film in the United States is an example of our ability to extend a franchise through innovation. Since it was launched, SUBOXONE ®  Film has attracted a high level of patient and physician satisfaction, along with differentiated value that is recognized by payors. As shown in the chart below, the innovative and differentiated aspects of SUBOXONE ®  Film resulted in a high level of patient conversion from SUBOXONE ®  Tablet.

We have successfully reformulated our core buprenorphine product through successive product generations, from mono-buprenorphine tablets, to SUBOXONE ®  Tablets (being buprenorphine plus naloxone), to SUBOXONE ® Film.  With each reformulation, we have sought to enhance patients’ experience in taking their opioid treatment medication and to improve their adherence to treatment.  Our Buprenorphine Monthly Depot formulation (RBP-6000) represents the next step in the development of the use of buprenorphine in the treatment of opioid dependence, reducing the risk of non-adherence as well as reducing the risk of misuse. We believe that RBP-6000 represents a strong pipeline product for us to focus our development efforts on in the short to medium term.

Within our opioid addiction treatment franchise, and in addition to our lead pipeline product, RBP-6000, we have a pipeline of life-cycle products which are supported by line-extension strategies and development programs designed to optimize the opioid dependence treatment franchise. For example, a higher dose (16 mg) SUBOXONE ®  Tablet for distribution in the EU was approved by the EMA in December 2015. See “Item 4.B. — Research and Development.”

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Responsible management

Our management team provides substantial expertise and stability to our business. As at December 2015, 58% of our team of clinical liaisons have worked with physicians for five years or more to help expand patient access to treatment.

Buprenorphine carries recognized risks of accidental overdose, misuse and abuse. In light of these risks, we conduct active risk management programs to ensure patient safety. In the United States, under an FDA-approved REMS, we have been engaged in the dissemination of information for patients, pharmacists and prescribers about the safe use of SUBOXONE ®  Film designed to (i) mitigate against the recognized risks of accidental overdose, misuse and abuse, and (ii) inform prescribers, pharmacists, and patients of the serious risks associated with SUBOXONE ®  Film.

In addition, our Medical Science Treatment Advisors (“MSTAs”) provide education on opioid dependence and addiction in response to requests from health professionals in the field. MSTAs also intervene directly with certain physicians who are identified by prescribing information or from information provided by our clinical liaisons as engaging in high-risk prescribing to educate them regarding safe prescribing habits. MSTAs may also engage in one-on-one discussions with certified prescribers and their staff to address general topics regarding addiction treatment. In the EU, we monitor for specific events agreed with the EMA as part of its risk management plan for SUBOXONE ®  Tablet.

We believe that drug safety is a function that can add value and support rather than being only a function of necessity and we continually look at system improvements. We also seek to provide flexibility in the face of legislative change and business growth in terms of new products and geographies.

Strong company culture which helps to inspire outstanding performance

We believe that our culture is a powerful driver of success which fosters entrepreneurship, team spirit and commitment, each executed with a high level of energy within a business mindset of strong financial discipline.

Our purpose is to pioneer life-transforming treatments for patients suffering from addiction and its co-morbidities. To enable this, we have a set of “Guiding Principles” which we believe has successfully guided decision making and set the blueprint for our operations since the launch of the U.S. business in 2003. These Guiding Principles are:

·               Focus on patient needs to drive decisions;

·                                           Believe that people’s actions are well-intended;

·                                           Seek the wisdom of the team;

·                                           See it, own it, make it happen;

·                                           Care enough to coach; and

·                                           Demonstrate honesty and integrity at all times.

Cultivating of strong relationships with key stakeholders

We have a strong commitment to our patient-focused business. We seek to ensure access to high quality treatment services for patients suffering from the chronic relapsing diseases of addiction by establishing partnerships with relevant stakeholders in the opioid dependence community.

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We engage at all levels across the addiction treatment spectrum, interacting with governments, key opinion leaders, physicians, payors, patients and patient advocacy groups in order to expand access to treatment and improve patient outcomes. We believe that our leadership in this market segment is demonstrated by our active participation in policy and legislative dialogue and shifting public perceptions of underserved patient populations, thereby enhancing access to treatment for patients. The following chart sets out details of the stakeholders who have historically been involved in addiction treatment and our points of influence in the dependence treatment space.

We work closely with physicians and professional medical societies to educate them about DATA 2000 certification and to expand access to treatment. In the United States over 30,000 physicians have been granted a DEA waiver under DATA 2000, permitting them to treat opioid dependence with a Schedule III, IV or V narcotic in their offices with more than 800,000 U.S. patients receiving SUBOXONE ® Film in 2015.

In the EU and other countries outside the United States, we have a commercial presence in 23 countries and we sell our products in 43 countries.

Products of the Indivior Group

We currently market and promote SUBOXONE ®  Film, SUBOXONE ®  Tablet and SUBUTEX ®  Tablet, each buprenorphine-based treatments for opioid dependence recognized by several health authorities around the world as treatment options to address the growing public health concern relating to the population of opioid-dependent patients. We also sell small amounts of two legacy products: TEMGESIC ®  sublingual tablets and injections outside the United States for the treatment of moderate to severe pain, as well as BUPRENEX ®  injection in the United States for the relief of moderate to severe pain; although these products comprised 2.3% of our net revenues in 2015.

Buprenorphine is an opioid with partial agonistic properties at the mu-opioid receptor and antagonistic properties at the kappa-opioid receptor; it dissociates slowly from mu-opioid receptors. Buprenorphine has been shown to be an effective treatment for opioid dependence, including maintenance and detoxification, when used within a framework of medical, social and psychological treatment. Buprenorphine was first marketed as an analgesic for the treatment of moderate to severe pain in 1978 as TEMGESIC ®  Injection in the United Kingdom and subsequently around the world both as an injection and as a sublingual tablet, although it was marketed in the United States only as an injection.

SUBUTEX ®  Tablet (buprenorphine) sublingual tablet

SUBUTEX ®  Tablet containing 0.4mg, 2mg, and 8mg buprenorphine was first approved for the treatment of opioid dependence in France in July 1995 and was launched in the French market in February 1996. 2mg and 8mg tablets were subsequently approved in the United States and launched in April 2003, but were discontinued from sale in the United States market in September 2011 due to market share erosion and their potential for abuse in comparison with buprenorphine-naloxone formulations. We currently market SUBUTEX ®  Tablet in 21 countries.

SUBOXONE ®  Tablet (buprenorphine and naloxone) sublingual tablet

SUBOXONE ®  Tablet is a fixed-dose combination of buprenorphine and naloxone in the ratio of four parts buprenorphine to one part naloxone. Naloxone is a potent antagonist at opioid receptors and produces opioid withdrawal effects of short duration in opioid-dependent subjects when not administered orally. When administered sublingually, naloxone is poorly absorbed and has no clinically significant effect.

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SUBOXONE ®  Tablet has been designed to discourage intravenous abuse of the tablet formulation in patients dependent on full opioid agonists (e.g., heroin and morphine). Initially, SUBOXONE ®  Tablet containing 2mg buprenorphine and 0.5mg naloxone, and 8mg buprenorphine and 2mg naloxone, was developed under NDA 20 733 and approved in the United States by the FDA in October 2002 as an orphan drug for maintenance treatment of opioid dependence. In the United States, SUBOXONE ®  Tablet lost orphan drug exclusivity in October 2009.

We announced that we were discontinuing distribution of SUBOXONE ®  Tablet in the U.S. market in September 2012 owing to pediatric safety concerns. In order to ensure continuity in patient treatment, and to provide adequate time for consultation with regulatory bodies and treatment stakeholders, withdrawal did not occur until March 2013.

SUBOXONE ®  Tablet is approved in 47 countries worldwide and marketed in 40 countries, with marketing approval pending in additional countries. In China, a pivotal Phase 3 efficacy trial and a Multiple Dose study of SUBOXONE ®  Tablets (buprenorphine and naloxone tablet) were completed in December 2015, paving the way for preparation of an NDA to be submitted to China FDA.

SUBOXONE ®  Film (buprenorphine and naloxone) sublingual film

SUBOXONE ®  Film was initially launched in the United States in 2010 and is currently marketed in the United States, Australia and Malaysia. It is one of only two products currently approved by the FDA for the treatment of opioid dependence pursuant to DATA 2000 in both the induction and maintenance phases of treatment, although SUBOXONE ®  Film has a market share 10 times greater than that of the alternative. SUBOXONE ®  Film was developed as an alternative to the sublingual tablet with the intention of producing similar safety and efficacy to SUBOXONE ®  Tablet, but with additional safety and compliance features. SUBOXONE ®  Film was developed through an exclusive agreement with MSRX, utilizing its proprietary PHARMFILM ®  technology, to deliver SUBOXONE ®  Film in a fast-dissolving sublingual film.

SUBOXONE ®  Film containing 2mg buprenorphine and 0.5mg naloxone, and 8mg buprenorphine and 2mg naloxone, was first approved for the maintenance treatment of opioid dependence in the United States in August 2010, in Australia in December 2010 and in Malaysia in July 2013. Additional dosage strengths of SUBOXONE ®  Film containing 4mg buprenorphine and 1mg naloxone, and 12mg buprenorphine and 3mg naloxone, were subsequently approved in the United States in August 2012 and in Australia in May 2014. SUBOXONE ®  Film was also approved in the United States in April 2014 for use in the induction phase of buprenorphine-based treatment of opioid dependence. In addition, on September 22, 2015 the FDA approved the buccal route of administration for SUBOXONE ®  Sublingual Film. Patients may now choose either under-the-tongue (sublingual) or against the cheek (buccal) administration.

In addition, the CTA to initiate clinical efficacy and safety trials for SUBOXONE ®  Film was approved by the Chinese Center for Drug Evaluation in November 2015.

TEMGESIC ®

TEMGESIC ®  is buprenorphine hydrochloride available in 0.2mg and 0.4mg sublingual tablet form and 1ml injection and indicated for the treatment of moderate to severe pain. We distribute TEMGESIC ®  in Algeria, Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Luxembourg, Morocco, the Netherlands, New Zealand, Norway, South Africa, Spain, Sweden, Switzerland, Taiwan and the United Kingdom. We have appointed MSD Latin America Services S. de R.L. as its exclusive distributor of TEMGESIC ®  in Ecuador and Mexico.

BUPRENEX ® (buprenorphine)

BUPRENEX ®  is the brand name for buprenorphine hydrochloride 1ml injections containing 0.324mg of buprenorphine hydrochloride in a 5% dextrose solution and indicated for the treatment of moderate to severe pain. BUPRENEX ®  injection is distributed only in the United States.

Research and Development

Chronic addictive behaviors are characterized by compulsive drug use, loss of control over drug-seeking and drug-taking and an intense drive to take the drug at the expense of other behaviors, with little regard for subsequent consequences. From a psychiatric perspective, drug dependence has aspects of both impulse control disorders and compulsive disorders. In addictive and compulsive disorders, which have prominent motivational drivers, dysfunction in the brain’s cortical regions significantly affects cognitive regulatory processes such that the individual fails to inhibit self-defeating urges or desires appropriately. This failure to resist repetitive, maladaptive behaviors is a key clinical feature of addictive disorders, and aspects of decision-making are compromised either directly (signifying a dysfunctional inhibitory system) or indirectly (signifying a dysfunctional reward system).

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We invest in research and development to create innovative products and services that address the needs of patients with the complex chronic condition of addiction. These efforts include the development of new products and formulations that are designed to minimize diversion and misuse, increase compliance with treatment, support public health, improve patient outcomes and expand access to treatment for areas of addiction where no pharmacotherapy is currently available.

Our research and development activities have historically been focused on four clusters of projects (covering opioid use disorder, alcohol use disorder, rescue medications and psychiatric comorbidities) aimed at expanding the range of treatment options for opioid dependence, opening access to rescue medications, focusing on the psychiatric co-morbidities of addiction and addressing unmet medical needs in the treatment of alcohol use disorders.

Expanding the range of treatment options for opioid dependence

RBP-6000 Buprenorphine Monthly Depot

RBP-6000 (buprenorphine monthly depot) is a sustained release formulation of buprenorphine using the ATRIGEL ®  delivery system which, upon subcutaneous injection, forms a solid implant in situ and releases buprenorphine over a 28-day period by diffusion. RBP-6000 is filled into a syringe and terminally sterilized.  Clinical studies with other active ingredients have demonstrated that the ATRIGEL ®  delivery system (a proprietary, polymer-based, sustained release, subcutaneous drug delivery technology) is well tolerated and provides consistent, sustained release of the incorporated drug over the designated dosing interval.  The ATRIGEL ®  delivery system is currently used in seven approved products worldwide and is also used in our RBP-7000 (risperidone monthly depot), which demonstrated clinical efficacy and safety during its pivotal Phase III study.

We believe that RBP-6000 has the potential to transform the treatment of opioid use disorder through the very high level of receptor occupancy it achieves (as shown by its Phase II clinical results and, in particular, by the successful opioid blockade study). The expected benefits of high levels of receptor occupancy/opioid blockade are that:

·                   Patients would likely experience substantially reduced levels of cravings associated with addiction;

·                   Patients should receive no gratification from abuse of opioids;

·                   Levels of compliance with treatment should be significantly improved;

·                   For physicians, there should be significantly improved clinical and patient outcomes using this technology;

·                   For physicians and wider society, there should be significantly reduced levels of potential diversion and abuse — once injected, the buprenorphine cannot be extracted and diverted; and

·                   For payors, the benefit will come in reduced costs from higher compliance, better clinical outcomes and reduced abuse and diversion.

The logic that underpins this technology is its potential to significantly improve the levels of compliance with treatment amongst opioid dependent patients which, in turn, would result in better patient outcomes, physician engagement and would reduce the costs of non-compliance to society as a whole. It has recently been estimated that opioid dependence costs society $55 billion per annum in the United States. RBP-6000 has been a major part of our product pipeline for several years and, in the event of a successful launch, we believe that it has the potential to provide the basis of a rewarding future for Indivior and our shareholders.

Two Phase II clinical trials with RBP-6000 have been completed and an End-of-Phase II meeting with the FDA took place in September 2014. The Indivior Group received confirmation from the FDA in November 2014 that RBP-6000 could proceed to Phase III of clinical trials and the Phase III clinical development studies are now well advanced:

·                   The Phase III efficacy study (RB-US-13-0001) achieved its last patient enrollment into the study in November 2015, with the last patient visit achieved on April 29, 2016; and

·                   The Phase III safety extension study (RB-US-13-0003) is on track, with screening closed in December 2015 and achieved its last patient into the study in February 2016.

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It is expected that the top line results (namely, the statistics that show whether the primary endpoints were met or not in respect of a clinical study) from the Phase III efficacy study will be available at the end of Q3 2016 and the last patient is expected to complete the Phase III safety extension study in Q1 2017. Subject to the outcomes of these two clinical trials, and given that the FDA granted Fast Track designation to RBP-6000 in May 2016, we currently anticipate filing our NDA for RBP-6000 with the FDA in Q2 2017 and, assuming we are granted a priority six-month review period, it is expected that this would lead to potential approval of RBP-6000 before the end of 2017, with launch in early 2018. Priority review by the FDA is available for drugs that for a serious or life-threatening disease or condition (1) eliminate or significantly reduce a drug reaction that limits treatment; (2) show evidence of increased effectiveness in prevention, treatment, or diagnosis of a disease; (3) demonstrate enhancement of patients’ compliance with taking the drug as required and scheduled that is expected to lead to an improvement in serious outcomes, and/or (4) show evidence of effectiveness and safety for a new subgroup of patients. In the event that the FDA does not award priority review status, the revised launch date for RBP-6000 is expected to take place during H1 2018.

There is currently no approved parenterally-administered, sustained-release buprenorphine formulation for the treatment of opioid dependence. Such a formulation could offer significant advantages over existing buprenorphine pharmacotherapy by improving patient compliance and reducing the potential for diversion, abuse, and unintentional pediatric exposure as well as regulating the frequency of patient/physician contact.

Focusing on the psychiatric co-morbidities of addiction

RBP-7000 (risperidone monthly depot)

RBP-7000 (risperidone monthly depot) is a novel sustained-release formulation of risperidone using the ATRIGEL ®  delivery system for the subcutaneous administration of risperidone once every 28 days for the treatment of schizophrenia. RBP-7000 consists of a two-syringe system, whose contents are mixed immediately prior to administration. One syringe contains the ATRIGEL ®  delivery system, and the other contains the sterile drug substance risperidone.

RBP-7000 is currently in a Phase III long-term safety extension study to assess its safety and tolerability as a treatment for subjects with acute schizophrenia. We completed a Phase III efficacy trial in May 2015 that demonstrated that both the 90mg and 120mg doses tested met the primary endpoint with statistically and clinically significant reductions in the symptoms of acute schizophrenia over an 8-week treatment period. The development of RBP-7000 has been delayed due to external manufacturing issues identified with one out of six stability batches required for NDA submission. We believe these issues are now rectified and additional batches will be manufactured to provide the required data, but this has resulted in a delay to the likely approval date and we currently expect to file an NDA for RBP-7000 in September 2017 and are targeting U.S. approval in mid-2018.

Long term pipeline products

SUBOXONE ®  Film for the EU

We have been developing SUBOXONE ®  Film for the EU. The U.S. formulation of SUBOXONE ®  Film was developed with a product quality reference target that met FDA shelf-life specifications. However, the shelf-life specifications in the EU are more restrictive with respect to buprenorphine assay, naloxone assay and naloxone-related impurities. We have initiated further development work on SUBOXONE ®  Film to establish shelf-life specifications that are aligned with the current SUBOXONE ®  Tablet specifications in the EU. This additional development work is being pursued with the aim of improving the physical and chemical stability profile of SUBOXONE ®  Film. However, our application for SUBOXONE ®  Film formulation in the EU has been delayed, as the prototype formulation has not met its specified bio-equivalency to EU SUBOXONE ®  Tablet formulation.

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Addressing unmet needs in the treatment of Alcohol Use Disorder

The pharmacological properties of baclofen have led to the investigation of its benefit for the treatment of alcohol dependence. Baclofen was originally approved by the FDA in 1977 for use in spasticity associated with neurologic conditions, such as multiple sclerosis and spinal cord lesions.  Numerous case reports, case series, and open-label trials have demonstrated that baclofen prolongs the time to first drink, reduces overall drinking days, and facilitates maintenance of abstinence.  The French regulatory agency Agence Nationale de Sécurité du Médicament et des Produits de Santé granted a Temporary Authorization for Use (an “ATU”) to baclofen for the treatment of alcohol dependence on March 14, 2014.  Under the ATU baclofen is now the subject of a monitoring protocol to collect efficacy and safety data. However, racemic baclofen has a number of significant pharmacokinetic limitations, including a narrow window of absorption in the upper small intestine and rapid clearance from the blood.

On May 14, 2014, we entered into a license agreement with XenoPort, Inc. pursuant to which we have been granted exclusive worldwide rights (including patent rights relating to compositions, dosage and process for manufacturing) for the development and commercialization of XenoPort’s clinical-stage oral product candidate arbaclofen placarbil for all indications. Arbaclofen placarbil is a novel transported pro-drug of R-baclofen designed to overcome the clinical pharmacokinetic deficiencies of racemic baclofen. Unlike racemic baclofen, arbaclofen placarbil is well absorbed from the large intestine, allowing the drug to be successfully formulated in a sustained release formulation that may allow for less frequent dosing and reduced fluctuations in plasma exposure. This in turn may lead to potentially improved clinical efficacy and tolerability, increased subject convenience and compliance from less frequent dosing (BID versus TID/QID), and an improved safety profile compared to immediate release baclofen.

Arbaclofen placarbil recently began its Phase IIA safety trial in humans. The first patient was successfully screened on September 15, 2015 with all randomized subjects dosed successfully on November 28, 2015. It is expected that top line results (i.e., the statistics that show whether the primary endpoints were met or not in respect of a clinical study) from the Phase IIA will be available in the third quarter of 2016. We believe this compound, if approved, could transform the treatment of alcohol use disorder similar to the way buprenorphine changed opioid dependency. We are targeting U.S. and EU approval in 2020 pending the final outcome (data analysis and interpretation) of Phase IIA study (RB-US-14-0001).

RBP-8000 - Cocaine esterase treating cocaine intoxication

RBP-8000 (cocaine esterase) is being developed for the treatment of cocaine intoxication and is intended as a single dose, intravenous therapy. RBP-8000 is a cocaine esterase that catalyses the hydrolysis of cocaine to the inactive metabolites ecgonine methyl ester and benzoic acid. This action mimics endogenous, natural butyrylcholinesterase, but with approximately 1,000 times greater activity. Cocaine esterase (RBP-8000) is a biological product derived from characterized cells through the use of a variety of expression systems and differs from most biopharmaceuticals in that its activity is not directed towards a pharmacological target per se, but rather a xenobiotic agent (cocaine) that is not normally present in the circulation.

A Type B meeting with the FDA on RBP-8000 for the treatment of cocaine intoxication was successfully held in May 2015 under Breakthrough Therapy Designation. A second Type B meeting was held on March 16, 2016.

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Research and development function

Our research and development team is led by the Chief Scientific Officer, Dr. Christian Heidbreder, a leading authority on the development of addiction treatments. At the date of this document, it consisted of 180 personnel.

The research and development team comprises the following sub-functions:

(A)                                Chemistry, Manufacturing and Controls, including personnel based in Hull, United Kingdom and individuals at the facility in Fort Collins, Colorado ensures that the chemical and physical properties of active pharmaceutical ingredients of all pipeline drug substances and products are analyzed and monitored at all critical phases of the development pathway;

(B)                                Clinical, accountable for creating, maintaining and executing all clinical development plans, in order to deliver differentiated target product profiles. The Clinical Organization also includes the Health Economics and Outcomes Research Unit, which demonstrates the cost-effectiveness and positioning of a new product and seeks to facilitate seamless launches shortly after approval; and

(C)                                Regulatory, leads the development and implementation of a consolidated global regulatory strategy to guide all assigned products through all development phases and post-approval lifecycle management.

Our research and development function endeavours to conduct all clinical trials (Phase I through Phase IV) in partnership with Clinical Research Organizations. During Phase II and Phase III of clinical trials, because the formulation of the product must be finalized and the scalability of production proven, we engage contractors with the relevant capabilities. During these Phases, therefore, the number of participants in, and consequently the expenses related to, the project increases significantly. Please refer to “Item 5. Operating and Financial Review and Prospects” for further details of research and development expenses during the financial periods included in this document.

Relationship with RB following the Demerger

Since the Demerger, RB and Indivior have operated as separate companies and neither company has a shareholding in the other. We have carried on an independent business as our main activity, have held strategic control over the commercialization of our products and have the freedom to implement our business strategy.

Pursuant to the terms of the Transitional Services Agreement entered into at the time of the Demerger, RB (on behalf of the RB Group) agreed to provide RBP Global Holdings Limited (on behalf of the Indivior Group) with certain services on commercial terms and on an arms’ length basis. These services included (i) the continued provision by RB to RBP Global Holdings Limited of various back office services and support across finance, HR, regulatory, IS, office space and facilities, (ii) the continuation of manufacturing, distribution and sales and marketing services set out in certain existing intergroup agreements between certain members of the RB Group and certain members of the Indivior Group and (iii) the provision of services, (for example software support) pursuant to existing agreements entered into by a member of the RB Group and a third party from which a member of the Indivior Group derives a benefit. A number of the existing intergroup agreements have terminated or may terminate on September 1, 2016. Please refer to “Item 10.C. —Material Contracts” for further information.

The work on separation from RB is materially finished as of July 1, 2016. The project to implement a new, company-wide ERP system has finished. Eleven markets and manufacturing & supply are on ERP. Thirteen other countries’ Finance and HR operations are outsourced to BDO International. All work to transition to Indivior  IT systems and applications has been done and we now operate independently from RB with the exception of certain RB R&D systems which are still shared with RB until the move out of the RB facility in Hull targeted for end of 2017.

Existing distribution, detailing and agency agreements between certain RB Group entities and Indivior Group entities relating to the distribution, sales and marketing by the RB Group of our products in jurisdictions where we do not yet have a commercial presence have continued post-Demerger and will continue until such time as they are terminated in accordance with the terms of the Transitional Services Agreement.

Regulatory Overview

Our activities are subject to a rigorous regulatory framework on a local and international level that conditions and affects our activities. The process of obtaining regulatory approvals and the subsequent compliance with applicable laws, regulations and other requirements require the expenditure of substantial time and financial resources. The following is a summary of the regulatory landscape applicable to our business and the reimbursement schemes applicable to its products in

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the key markets in which we operate.

United States

Overview

Pharmaceutical companies operate in a highly regulated environment. In the United States, we must comply with laws, regulations and other requirements promulgated by numerous federal and state authorities, including the FDA and other agencies and divisions of the Department of Health and Human Services, the DEA and other agencies of the Department of Justice, the Consumer Product Safety Commission, the Environmental Protection Agency, the U.S. Bureau of Customs and Border Protection (the “CBP”) and state agencies such as boards of pharmacy. Applicable legal requirements govern to varying degrees the research, development, manufacturing, commercialization and sale of our prescription pharmaceutical products, including pre-clinical and clinical testing, approval, production, labelling, sale, distribution, import, export, post-market surveillance, advertising, dissemination of information and promotion. Failure to comply with applicable legal requirements can result in product recalls, seizures, injunctions, refusal to approve or withdrawal of approval of product applications, monetary fines or criminal prosecution.

Food and Drug Administration

The FDA’s authority to regulate pharmaceuticals comes primarily from the Federal Food, Drug, and Cosmetic Act (“FFDCA”). In addition to reviewing NDAs for branded drugs and ANDA filings for generic drugs, the FDA has the authority to ensure that pharmaceuticals introduced into interstate commerce are neither “adulterated” nor “misbranded.” Adulterated means that the product or its manufacture does not comply with FDA quality and related standards. A drug is adulterated if, among other things: (i) it is prepared under unsanitary conditions such that it may have been contaminated or may cause injury to patients, (ii) its manufacture does not comply with cGMP, (iii) it does not comply with an official compendium, (iv) its strength, purity or quality differs from that which it purports to possess, or (v) if it is manufactured, processed or held in a facility which refuses FDA inspection. Misbranded means, among other things, that the labelings of, or advertising or promotional materials for, the product contain false or misleading information, fail to conform to the FDA approval for the drug, or fail to include required information.

In order to market and sell a new drug product in the United States, a drug manufacturer must file with the FDA an NDA that shows the safety and effectiveness of the new drug. In order to market and sell a generic version of an already-approved drug product, a drug manufacturer must file an ANDA that shows that the generic version is, with narrow exceptions, the same active ingredient, dosage form, strength and route of administration as a previously approved reference product, and “bioequivalent” to that reference product, meaning that it is absorbed at the same rate and to the same extent as the reference product. The FDA classifies certain generic drugs as “therapeutically equivalent,” meaning that they are expected to have the same clinical effect and safety as the branded drug product. Alternatively, a manufacturer may submit an NDA under FFDCA section 505(b)(2) for a drug product that has some differences from an already-approved drug product, but that relies in whole or in part on the findings of safety and/or effectiveness of a previously approved reference product, or on medical literature. A section 505(b)(2) NDA must demonstrate that the proposed product is safe and effective notwithstanding the differences from the approved drug product.

Research, Development and NDA process

The path leading to FDA approval of an NDA for a new drug begins when the drug product is merely a chemical formulation in the laboratory. In general, the process involves the following steps:

(i)                                      completion of formulation, laboratory and animal testing in accordance with good laboratory practices, which characterizes the drug product from a pre-clinical perspective and provides preliminary evidence that the drug product is safe to test in human beings;

(ii)                                   filing with the FDA an Investigational NDA, which once effective will permit the conduct of clinical trials (testing in human beings under adequate and well-controlled conditions);

(iii)                                designing and conducting clinical trials to show the safety and efficacy of the drug product in accordance with GCP and other requirements;

(iv)                               submitting the NDA for FDA review, which must include data on safety and effectiveness, as well as characterization of the drug product and a description of the manufacturing process, controls and facilities;

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(v)                                  satisfactory completion of FDA pre-approval inspections regarding the conduct of the clinical trials and manufacturing at the designated facility or facilities in accordance with cGMP;

(vi)                               if applicable, completion of a FDA Advisory Committee meeting in which the FDA requests views and recommendations from outside experts in evaluating the NDA;

(vii)                            final FDA approval of the full prescribing information, labelling and packaging of the drug product; and

(viii)                         commitments to meet post-approval requirements, including on-going monitoring and reporting of adverse events related to the drug product, implementation of a REMS, if applicable, and conduct of any required Phase IV studies.

Clinical trials are typically conducted in four sequential phases, although they may overlap. The four phases are as follows:

(i)                                      Phase I trials are typically small (fewer than 100 study subjects, and often involving healthy volunteers) and are designed to determine the pharmacokinetics and toxicity of the drug product.

(ii)                                   Phase II trials usually involve 100 to 300 participants and are designed to determine whether the drug product produces any clinically significant effects in patients with the intended disease or condition and to provide further information about safety and dosing. If the results of these trials show promise, then a larger Phase III trial may be conducted.

(iii)                                Phase III trials are often multi-institution studies that involve a large number of participants and are designed to show efficacy and safety. Phase III (and some Phase II) trials are designed to be pivotal trials. The goal of a pivotal trial is to establish the safety and efficacy of a drug product with sufficient robustness for purposes of regulatory approval.

(iv)                               In some cases, the FDA requires Phase IV trials, which are usually performed after the NDA has been approved. Such post-marketing clinical studies or surveillance programs are intended to obtain more information about the risks of harm, benefits and optimal use of the drug product by evaluating the results of the drug product in a larger number of patients. The FDA may require post-approval studies either at the time of approval or, if it becomes aware of new safety information, after approval.

A drug manufacturer may conduct clinical trials either in the United States or outside the United States, but in all cases must comply with GCP and must ensure that there is: (i) a legally effective informed consent process when enrolling participants; (ii) an independent review by an Institutional Review Board to minimize and manage the risks of harm to participants; and (iii) on-going monitoring and reporting of adverse events related to the drug product.

In addition, under the Pediatric Research Equity Act 2003, as amended, all NDAs must include assessments on a drug in pediatric patients unless the applicant receives a waiver or deferral. A drug sponsor may also seek to conduct a clinical trial of a drug product on pediatric patients based on a written request from the FDA in order to obtain a form of marketing exclusivity as permitted under the Best Pharmaceuticals for Children Act 2002, as amended.

The path leading to FDA approval of a section 505(b)(2) NDA for a drug product that has differences from an already-approved product is somewhat shorter. In a section 505(b)(2) NDA, the drug sponsor relies, in whole or in part, on investigations to which the sponsor does not have a right of reference to establish that its proposed product is safe and effective. For example, a section 505(b)(2) NDA may rely on published literature or on the FDA’s prior finding of safety and effectiveness of another company’s product. Section 505(b)(2) NDAs are typically used for new products with differences from previously approved products such as in dosage forms, dosage strengths, route of administration or indication and where, therefore, an ANDA may not be used. New clinical trial data may also be needed to establish that the proposed product is safe and effective given its differences.

Under the U.S. Prescription Drug User Fee Act 1992, as amended, the FDA has the authority to collect fees from drug manufacturers who submit NDAs and section 505(b)(2) NDAs for review and approval. These user fees help the FDA fund the drug review process. For U.S. fiscal year 2016, the user fee rate has been set at $2,374,200 for an NDA and $1,187,100 for an NDA not requiring clinical data, generally certain section 505(b)(2) NDAs. The FDA has committed to review and act upon ninety per cent. of new NDAs within six

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months for applications given priority review and approximately ten months for standard review, with two additional months added to each of these time periods for new molecular entities.

ANDA process

The path leading to FDA approval of an ANDA is very different from that of an NDA. By statute, the drug manufacturer does not complete pre-clinical studies and safety and efficacy clinical trials, and instead focuses on a showing of sameness and bioequivalence to a previously approved RLD, typically a branded drug approved under an NDA. Sameness means, with limited exceptions, the same active ingredient or ingredients, dosage form, strength, route of administration and labelling. Bioequivalence is generally established by studies that involve comparing the absorption rate and concentration levels of a generic drug in the human body to that of the RLD. In the event that the generic drug behaves in the same manner in the human body as the RLD, the two drug products are considered bioequivalent. The FDA considers a generic drug therapeutically equivalent, and therefore the drug is generally substitutable under state pharmacy dispensing law, where it is shown to be the same as and bioequivalent to the RLD.  Legislation enacted in most states in the United States allows or, in some instances mandates, that a pharmacist dispense an available generic drug that has been rated therapeutically equivalent when filling a prescription for a branded product, in the absence of specific contrary instructions from the prescribing physician.  ANDA filings must include information on manufacturing processes, controls and facilities comparable to an NDA.

In August 2013, it was reported that the average review time for an ANDA is about 35 months. In 2010, Congress passed into law the Generic Drug User Fee Act to address the FDA’s backlog, which at the time was over 2,000 ANDA filings. This legislation granted the FDA authority to collect, for the first time, user fees from generic drug manufacturers who submit ANDA filings for review and approval, and the fees collected help the FDA fund the drug approval process. For U.S. fiscal year 2016, the user fee rate is set at $76,030 for an ANDA and $38,020 for a prior approval supplement to an ANDA. The FDA will also collect from generic drug manufacturers a separate fee where they reference a so-called Drug Master File for a contract manufacturer, and separate annual manufacturing facility fees for API and finished drug products. The FDA anticipated that the review process timeframe would not begin to improve until U.S. fiscal year 2015.  For U.S. fiscal year 2016, the FDA has committed to reviewing 75% of original ANDA submissions within 15 months.

Aside from the backlog described above, the timing of FDA approval of ANDA filings depends on other factors, including whether an ANDA holder has challenged any listed patents to the reference listed drug (the “RLD”) and whether the RLD is entitled to one or more periods of non-patent data or marketing exclusivity under the FFDCA, as discussed elsewhere in this section.

Patent and non-patent exclusivity periods

A sponsor of an NDA is required to identify in its application any patent that claims the drug or a use of the drug subject to the application. Upon NDA approval, the FDA lists these patents in a publication referred to as the Orange Book. Any person that files a section 505(b)(2) NDA that relies upon reference to an approved NDA for which the patents are listed, or an ANDA to secure approval of a generic version of the previously approved drug, must make a certification in respect of listed patents. If the ANDA or section 505(b)(2) NDA applicant certifies that there are no listed patents or that the listed patents have expired, the FDA may approve the application immediately. If the applicant certifies that the patents have not expired, the FDA may only approve the application upon expiry of the patents. Alternatively, the applicant may certify that the listed patents are invalid, unenforceable and/or not infringed by the proposed drug (a “Paragraph IV certification”). The applicant must give notice to the holder of the NDA for the RLD and the patent holder (if different) of the bases upon which the patents are challenged. If the NDA holder or patent owner sues the applicant for infringement within 45 days, the FDA may not approve the ANDA or section 505(b)(2) NDA until the earliest of: (i) 30-months after receipt of the notice by the holder of the NDA for the RLD; (ii) entry of a district court of appellate court judgment holding the patent invalid, unenforceable or not infringed; (iii) such other time as the court may order; or (iv) the expiry of the patent. If an infringement suit is not initiated within 45 days of notice to the NDA holder, the FDA may approve the application immediately.

A key motivation for ANDA applicants to challenge patents is the 180-day market exclusivity period (“ generic exclusivity ”) granted to the developer of a generic version of a product that is the first to submit an ANDA with a Paragraph IV certification. For a variety of reasons, there are situations in which a

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company may not be able to take advantage of an award of generic exclusivity. The determination of when generic exclusivity begins and ends is complicated, and is subject to a number of forfeiture provisions.

The holder of the NDA for the RLD may also be entitled to certain non-patent exclusivity during which the FDA cannot accept for filing or approve an application for a competing generic product or section 505(b)(2) NDA product. Generally, if the RLD is a new chemical entity, the FDA may not accept for filing any application that references the innovator’s NDA for five years from the approval of the innovator’s NDA. However, this five-year period is shortened to four years where an applicant’s ANDA includes a Paragraph IV certification, and the 30-month stay on FDA approval is lengthened accordingly. In other cases, where the innovator has provided certain clinical study information essential for approval, the FDA may accept for filing, but may not approve, an ANDA or section 505(b)(2) application that references the corresponding aspect of the innovator’s NDA for a period of three years from the approval of the innovator’s NDA. Certain additional periods of exclusivity may be available, such as orphan exclusivity if the RLD is indicated for use in a rare disease or condition, or pediatric exclusivity if the RLD is studied for pediatric patients based on a written request from the FDA.

Risk Evaluation and Mitigation Strategies

The FDA has the authority to require the manufacturer to provide a REMS that is intended to ensure that the benefits of a drug product (or class of drug products) outweigh the risks of harm. The FDA may require that a REMS include elements to assure safe use to mitigate a specific serious risk of harm, such as requiring that prescribers have particular training or experience or that the drug product is dispensed in certain healthcare settings. The FDA has the authority to impose civil penalties on or take other enforcement action against any drug manufacturer who fails properly to implement an approved REMS. Separately, there are prohibitions on a drug manufacturer using an approved REMS to delay generic competition. The FDA has been active in instituting class-wide and product-specific REMS for opioid products. For example, in December 2011, the FDA approved a single, class-wide REMS for transmucosal immediate-release fentanyl products (called “the TIRF REMS Access Program”) that requires manufacturers, distributors, prescribers, dispensers and patients to enrol in a real-time database that maintains a closed-distribution system.

In July 2012, the FDA approved a class-wide REMS (called the “Extended-Release and Long-Acting Opioid Analgesics REMS”) that affected more than 30 extended-release and long-acting opioid analgesics (both branded and generic products). This REMS requires drug manufacturers to make available training on appropriate prescribing practices for healthcare professionals who prescribe these opioid analgesics and to distribute educational materials on their safe use to prescribers and patients. The FDA requires a REMS for SUBOXONE ®  Film, and other products that the Indivior Group sells in the future may become subject to a REMS specific to the product or shared with other products in the same class of drug.

ANDA filings are generally subject to REMS requirements where applicable, and branded and generic companies are required to adopt a shared REMS unless the FDA grants a waiver.

Quality assurance requirements

The FDA enforces requirements to ensure that the methods used in, and the facilities and controls used for, the manufacture, processing, packaging and holding of drugs conform to cGMP. The cGMP requirements that the FDA enforces are comprehensive and cover all aspects of manufacturing operations, from receipt of raw materials to finished product distribution, and are designed to ensure that the finished products meet all the required identity, strength, quality and purity characteristics. Ensuring compliance requires a continuous commitment of time, money and effort in all operational areas.

The FDA conducts pre-approval and post-approval inspections of facilities engaged in the development, manufacture, processing, packaging, testing and holding of the drugs subject to NDAs and ANDA filings. Prior to approval, if the FDA concludes that the facilities to be used do not or did not meet cGMP, it will not approve the application. Corrective actions to remedy the deficiencies must be performed and are usually verified in a subsequent inspection.

The FDA also conducts periodic post-approval inspections of drug manufacturing facilities to assess their cGMP status. Adverse inspections can lead to FDA inspectional observations, warning letters, seizure, recalls, injunctions, and shutdown of facilities. In addition, where products or components for manufacturing are being imported into the United States, the FDA may issue an import alert to prevent shipments into

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the country. In addition, if the FDA concludes that a company is not in compliance with cGMP requirements, sanctions may be imposed that include preventing that company from receiving the necessary licenses to export its products, preventing further approvals for applications involving the facility or facilities and issue and classifying that company as an “unacceptable supplier,” thereby disqualifying that company from selling products to governmental agencies.

Reporting requirements

Pharmaceutical manufacturers are subject to adverse event reporting requirements during clinical trials and following approval, with expedited reporting for certain serious adverse events and periodic reporting for other adverse events. To comply with these requirements, manufacturers must have robust procedures for surveillance, receipt, evaluation and reporting of adverse events.  Manufacturers must also submit annual reports to FDA for each approved product, and field alert reports where there is a quality or mislabeling issue with a product already distributed to the market.

Labelling and marketing

For all pharmaceuticals sold in the United States, the FDA and other regulatory and law enforcement bodies also regulate sales and marketing to ensure that drug product claims made by manufacturers are not false, misleading or otherwise improper. Manufacturers are required to file copies of all product-specific promotional materials with the FDA’s Office of Prescription Drug Promotion at the time of their first use. Failure to implement a robust internal company review process and to comply with FDA requirements regarding labelling and promotion increases the risk of enforcement action by the FDA, the U.S. Department of Justice or the states.

In addition, the FDA has the authority to require labelling changes after approval of a drug if it becomes aware of new safety information.

Import and export requirements

To import pharmaceuticals into the United States, the importer must file an entry notice and bond with the CBP. All drugs are subject to FDA examination before release by the CBP. Any article that appears to be in violation of the FFDCA may be refused admission and a notice of detention and hearing may be issued. If the FDA ultimately refuses admission, the CBP may issue a notice for redelivery and assess liquidated damages for up to three times the value of the drugs.

Products for export from the United States are subject to foreign countries’ import requirements and the exporting requirements of the FDA. For example, international sales of drugs manufactured in the United States that are not approved by the FDA for use in the United States are subject to FDA export requirements. Foreign countries often require, among other things, an FDA certificate for products for export, also called a Certificate for Foreign Government, in which the FDA certifies that the product has been approved in the United States and that the manufacturing facilities are in compliance with cGMP. To obtain this certificate, the drug manufacturer must apply to the FDA.

Drug Enforcement Administration

The DEA is the federal agency in the United States responsible for enforcement of the CSA. The CSA classifies drugs and other substances based on identified potential for dependence and abuse. Schedule I controlled substances, such as heroin and LSD, have a high abuse potential and have no currently accepted medical use; thus they cannot be lawfully marketed or sold. Opioids, such as oxycodone, morphine, hydrocodone and buprenorphine are either Schedule II or Schedule III controlled substances. Consequently, the manufacture, storage, distribution and sale of these substances are all highly regulated.

The DEA regulates the availability of API, products under development and marketed drug products that are Schedule II by setting annual quotas. We must apply to the DEA every year for a manufacturing quota to manufacture API and a procurement quota to manufacture finished dosage products. The DEA has discretion to grant or deny manufacturers’ manufacturing and procurement quota requests.

DEA regulations make it extremely difficult for a manufacturer in the United States to import finished dosage forms of controlled substances manufactured outside the United States, particularly for Schedule II controlled substances and narcotics in other Schedules. These rules reflect a broader enforcement approach by the DEA to regulate the manufacture, distribution and dispensing of legally-produced controlled substances. Accordingly, drug manufacturers who market and sell finished dosage

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forms of controlled substances in the United States often manufacture or have them manufactured in the United States.

The DEA also requires drug manufacturers to design and implement a system that identifies suspicious orders of controlled substances, such as those of unusual size, those that deviate substantially from a normal pattern and those of unusual frequency, prior to completion of the sale. A compliant suspicious order monitoring system includes well-defined due diligence, “know your customer” efforts and order monitoring.

To meet its responsibilities, the DEA conducts periodic inspections of registered establishments that handle controlled substances. Annual registration is required for any facility that manufactures, tests, distributes, dispenses, imports or exports any controlled substance. The facilities must have the security, control and accounting mechanisms required by the DEA to prevent loss and diversion. Failure to maintain compliance, particularly as manifested in loss or diversion, can result in regulatory action. The DEA may seek civil penalties, refuse to renew necessary registrations or initiate proceedings to revoke those registrations. In certain circumstances, violations could lead to criminal proceedings.

Individual states also regulate controlled substances, and manufacturers, distributors and third-party API suppliers and manufacturers, are subject to such regulation by several states with respect to the manufacture and distribution of these products.

Drug Addiction and Treatment Act 2000

DATA 2000 permits qualified physicians to obtain a waiver from the separate registration requirements of the Narcotic Addict Treatment Act 1974 to treat opioid dependence with Schedule III, IV and V opioid medications or combinations of such medications that have been specifically approved by the FDA for that indication. Such medications may be prescribed and dispensed. Buprenorphine is currently the only narcotic medication approved by the FDA for the treatment of opioid dependence within the Schedules listed above.

In order to qualify for a waiver under DATA 2000, physicians must hold a current state medical license, a valid DEA registration number and must meet one or more of the following conditions:

(i)                                      the physician holds a sub-specialty board certification in addiction psychiatry from the American Board of Medical Specialties;

(ii)                                   the physician holds an addiction certification from the American Society of Addiction Medicine;

(iii)                                the physician holds a sub-specialty board certification in addiction medicine from the American Osteopathic Association;

(iv)                               the physician has completed not less than eight hours of training with respect to the treatment and management of opioid-addicted patients. This training can be provided through classroom situations, seminars at professional society meetings, electronic communications or otherwise. The training must be sponsored by one of five organizations authorized in DATA 2000 to sponsor such training, or by any other organization that the Secretary of the Department of Health and Human Services determines to be appropriate;

(v)                                  the physician has participated as an investigator in one or more clinical trials leading to the approval of a narcotic drug in Schedule III, IV or V for maintenance or detoxification treatment, as demonstrated by a statement submitted to the Secretary of the Department of Health and Human Services by the sponsor of such approved drug;

(vi)                               the physician has other training or experience, considered by the state medical licensing board (of the state in which the physician will provide maintenance or detoxification treatment) to demonstrate the ability of the physician to treat and manage opioid-addicted patients; or

(vii)                            the physician has other training or experience the Secretary of the Department of Health and Human Services considers demonstrates the ability of the physician to treat and manage opioid-addicted patients.

In addition, physicians must attest that they have the capacity to refer addiction treatment patients for appropriate counselling and other non-pharmacological therapies, and that they will not have more than 30 patients on such addiction treatment at any one time unless, not sooner than one year after the date on which the practitioner submitted the initial

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notification, the practitioner submits a second notification to the Secretary of the Department of Health and Human Services of the need and intent of the practitioner to treat up to 100 patients.

Government benefit programs

Statutory and regulatory requirements for Medicaid, Medicare, Tricare and other government healthcare programs govern provider reimbursement levels for government beneficiaries, including requiring that all pharmaceutical companies pay rebates to individual states based on Medicaid utilization of the manufacturer’s products. The federal and state governments may continue to enact measures in the future aimed at containing or reducing payment levels for prescription pharmaceuticals paid for in whole or in part with government funds.

From time to time, legislative changes are made to government healthcare programs that impact our business. For example, the Medicare Prescription Drug Improvement and Modernisation Act 2003 created a new out-patient prescription drug coverage program for people with Medicare through a new system of private market drug benefit plans. This law provides an out-patient prescription drug benefit to seniors and individuals with disabilities in the Medicare program (“Medicare Part D”). Congress continues to examine various Medicare policy proposals that may result in pressure on the prices of prescription drugs in the Medicare program.

In addition, the Affordable Care Act provides for major changes to the U.S. healthcare system, which may transform the delivery and payment for healthcare services in the United States. While some provisions of the Affordable Care Act have already taken effect, many of the provisions to expand access to healthcare coverage are just being implemented or are yet to be implemented. Thus, there are still many challenges and uncertainties ahead. Such a comprehensive reform measure will require expanded implementation efforts on the part of federal and state agencies embarking on rule-making to develop the specific components of their new authority. We intend to monitor closely the implementation of the Affordable Care Act and related legislative and regulatory developments. The overall impact of the Affordable Care Act reflects a number of uncertainties; however, we believe that the impact to our business will be largely attributable to changes in the Medicare Part D coverage gap, the imposition of an annual fee on branded prescription pharmaceutical manufacturers and increased rebates payable to state Medicaid programs. There are a number of other provisions in the legislation that collectively are expected to have a small impact, including originator average manufacturers’ price for new formulations and the expansion of the ceiling prices under section 340B of the Public Health Services Act 1944, as amended, (the 340B Program) to new entities.

Healthcare fraud and abuse laws

We are subject to various federal, state and local laws targeting fraud and abuse in the healthcare industry. For example, in the United States, there are federal and state anti-kickback laws that prohibit the payment or receipt of kickbacks, bribes or other remuneration intended to induce the purchase or recommendation of healthcare products and services covered by government healthcare programs or reward past purchases or recommendations. In addition, the federal False Claims Act prohibits presenting or causing to be presented a false claim for payment by a federal healthcare program, and this law has been interpreted to include claims caused by improper drug manufacturer product promotion or the payment of kickbacks. Under the so-called Sunshine Act and related provisions of the Affordable Care Act, we must report to the federal government information on payments and transfers of value made to physicians and certain healthcare institutions, and also on drug samples distributed. In addition, if we receive protected patient health information, it may be subject to federal or state privacy laws. Violations of these laws can lead to civil and criminal penalties, including fines, imprisonment and exclusion from participation in federal healthcare programs. These laws apply to hospitals, physicians and other potential purchasers of our products and are potentially applicable to us as both a manufacturer and a supplier of products reimbursed by federal healthcare programs. In addition, some states in the United States have enacted compliance and reporting requirements that apply to drug manufacturers.

We must comply with the FCPA and similar worldwide anti-bribery laws in non-U.S. jurisdictions, which generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. Because of the predominance of government-sponsored healthcare systems around the world, most of our customer relationships outside the United States are with governmental entities and are therefore subject to such anti-bribery laws.

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European Union

Overview

In the EU, medicinal products are subject to extensive pre- and post-marketing regulation by regulatory authorities at both the EU and national levels. Additional rules also apply at the national level relating specifically to controlled substances. The June 2016 referendum in the United Kingdom on whether to remain in the European Union could have an impact on the regulation of our product candidates. For more information, see “Item 3.0. Risk Factors.”

Clinical trials and marketing approval

Clinical trials of medicinal products in the EU must be conducted in accordance with EU and national regulations and the International Conference on Harmonization (“ICH”) guidelines on GCP. Prior to commencing a clinical trial, the sponsor must obtain a clinical trial authorization from the competent authority and a positive opinion from an independent ethics committee. The application for a clinical trial authorization must include, among other things, a copy of the trial protocol and an investigational medicinal product dossier containing information about the manufacture and quality of the medicinal product under investigation.  Currently, clinical trial authorization applications must be submitted to the competent authority in each EU member state in which the trial will be conducted.  Under the new Regulation on Clinical Trials, there will be a centralized application procedure where one national authority takes the lead in reviewing the application and the other national authorities have only a limited involvement.  Any substantial changes to the trial protocol or other information submitted with the clinical trial applications must be notified to or approved by the relevant competent authorities and ethics committees.

After completion of the required clinical testing, a drug manufacturer must obtain a marketing authorization before it may place its medicinal product on the market in the EU. There are various application procedures available depending on the type of product involved. The centralized procedure gives rise to marketing authorizations that are valid throughout the EU and, by extension (after national implementing decisions), in Norway, Iceland and Liechtenstein, which, together with the EU member states, comprise the EEA. Applicants file marketing authorization applications with the EMA where they are reviewed by a relevant scientific committee, in most cases the Committee for Medicinal Products for Human Use (“CHMP”). The EMA forwards CHMP opinions to the European Commission, which uses them as the basis for deciding whether to grant a marketing authorization. The centralized procedure is compulsory for medicinal products that (i) are derived from biotechnology processes; (ii) contain a new active substance (not yet approved on November 20, 2005) indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative disorders, viral diseases or autoimmune diseases and other immune dysfunctions; (iii) are orphan medicinal products; or (iv) are advanced therapy medicinal products, such as gene or cell therapy medicines. For medicines that do not fall within these categories, an applicant may voluntarily submit an application for a centralized marketing authorization to the EMA, as long as the CHMP agrees that (i) the medicine concerned contains a new active substance (not yet approved on November 20, 2005); (ii) the medicine is a significant therapeutic, scientific, or technical innovation; or (iii) its authorization under the centralized procedure would be in the interest of public health.

For those medicinal products for which the centralized procedure is not available, the applicant must submit marketing authorization applications to the national medicines regulators through one of three procedures: (i) a national procedure, which results in a marketing authorization in a single EU member state; (ii) the decentralized procedure, in which applications are submitted simultaneously in two or more EU member states; and (iii) the mutual recognition procedure, which must be used if the product has already been authorized in at least one other EU member state, and in which the EU member states are required to grant an authorization recognizing the existing authorization in the other EU member state, unless they identify a serious risk to public health. A national procedure is only possible for one-member state; as soon as an application is submitted in a second member state the mutual recognition or decentralized procedure will be triggered.

Marketing authorization applications for generic medicinal products do not need to include the results of pre-clinical and clinical trials but can instead refer to the data included in the marketing authorization of a reference product for which regulatory data exclusivity has expired. If a marketing authorization is granted for a medicinal product containing a new active substance, that product benefits from eight years of data exclusivity during which generic marketing authorization applications referring to the data of that product may not be accepted by the regulatory authorities, and a further two years of market exclusivity during which such generic products may not be placed on the market. The two-year period may be extended to three years if during the first eight years a new therapeutic indication with significant clinical benefit over existing therapies is approved.

In the EU, companies developing a new medicinal product must agree a Paediatric Investigation Plan (“PIP”) with

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the EMA and must conduct pediatric clinical trials in accordance with that PIP unless a waiver applies, for example because the relevant disease or condition occurs only in adults. The marketing authorization application for the product must include the results of pediatric clinical trials conducted in accordance with the PIP, unless a waiver applies, or a deferral has been granted, in which case the pediatric clinical trials must be completed at a later date. Products that are granted a marketing authorization on the basis of the pediatric clinical trials conducted in accordance with the PIP are eligible for a six-month extension of the protection under a supplementary protection certificate (if any is in effect at the time of approval). This pediatric reward is subject to specific conditions and is not automatically available when data in compliance with the PIP are developed and submitted.

Pharmacovigilance and risk management

The holder of a marketing authorization must establish and maintain a pharmacovigilance system and appoint an individual qualified person for pharmacovigilance who is responsible for oversight of that system. Key obligations include expedited reporting of suspected serious adverse reactions and submission of periodic safety update reports (“PSURs”).

All new marketing authorization applications must include a RMP describing the risk management system that the company will put in place and documenting measures to prevent or minimize the risks associated with the product. The regulatory authorities may also impose specific obligations as a condition of the marketing authorization. Such risk-minimization measures or post-authorization obligations may include additional safety monitoring, more frequent submission of PSURs or the conduct of additional clinical trials or post-authorization safety studies.

Promotional restrictions

All advertising and promotional activities for the product must be consistent with the approved summary of product characteristics, and therefore all off-label promotion is prohibited. Direct-to-consumer advertising of prescription medicines is also prohibited in the EU. Although general requirements for advertising and promotion of medicinal products are established under EU directives, the details are governed by regulations in each member state and can differ from one country to another.

Manufacturing

Medicinal products may only be manufactured in the EU, or imported into the EU from another country, by the holder of a manufacturing authorization from the competent national authority, such as the MHRA. The manufacturer or importer must have a qualified person who is responsible for certifying that each batch of product has been manufactured in accordance with EU cGMP before releasing the product for commercial distribution in the EU or for use in a clinical trial. Manufacturing facilities are subject to periodic inspections by the competent authorities for compliance with cGMP.

The manufacture, import, export, storage, distribution and sale of controlled substances are subject to additional regulation at the national level. In many EU member states the regulatory authority responsible for medicinal products is also responsible for controlled substances. Responsibility is, however, split in some member states, including the United Kingdom, where the Home Office is responsible for controlled substances while the MHRA is responsible for medicinal products. Generally, any company manufacturing or distributing a medicinal product containing a controlled substance in the EU will need to hold a controlled substances license from the competent national authority and will be subject to specific record-keeping and security obligations. Separate import or export certificates are required for each shipment into or out of the member state.

Pricing and reimbursement

Governments influence the price of medicinal products in the EU through pricing and reimbursement rules and control of national healthcare systems that fund a large part of the cost of those products to consumers. Some jurisdictions operate positive and negative list systems under which products may only be marketed once a reimbursement price has been agreed. To obtain reimbursement or pricing approval, some of these countries may require the completion of clinical trials that compare the cost-effectiveness of a particular product candidate to currently available therapies. Other member states allow companies to fix their own prices for medicines but monitor and control company profits. Such differences in national pricing regimes may create price differentials between EU member states. The downward pressure on healthcare costs in general, particularly prescription medicines, has become intense. As a result, barriers to entry of new products are becoming increasingly high and patients are unlikely to use a drug product that is not reimbursed by their government.

In addition, in most EU member states physicians are encouraged or even required to prescribe generic rather than

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branded products and many governments of EU member states also advocate generic substitution by requiring or permitting pharmacists to substitute a different company’s generic version of the branded drug product that was originally prescribed.

Rest of the world

Current markets

After the United States and the EU, our largest markets are Canada and Australia, where we market our products pursuant to standards set by Health Canada and the Therapeutic Goods Administration respectively. We also market our products in certain other developed countries. The laws, guidelines and standards promulgated by the relevant regulatory authorities that regulate the development, testing, manufacturing, marketing and selling of pharmaceuticals in each of these jurisdictions are broadly similar to those in the United States and the EU, although the precise requirements may vary from country to country.

We also market our products in various emerging markets, where regulatory review and oversight processes continue to evolve. At present, such countries typically require prior regulatory approval or marketing authorization from large, developed markets (such as the United States) before they will initiate or complete their review. Some countries also require the applicant to conduct local clinical trials as a condition of marketing authorization. Many emerging markets continue to implement measures to control drug product prices, such as implementing direct price controls or advocating the prescribing and use of generic drugs.

China

We are currently seeking regulatory approval to market our products in China, where pharmaceutical companies and the drug development and marketing processes are heavily regulated. We will need to comply with China’s Drug Administration Law and related implementing regulations, which single out narcotic drugs and psychotropic drugs for special controls, such as additional restrictions on import and export and production quotas. Sale may be restricted, depending upon the risk class, to and by certain wholesalers and to certain pre-approved healthcare institutions.  There is also a significant body of regulation from various central and local agencies with jurisdiction over different parts of the development and marketing processes including research and development, approval, license maintenance, manufacturing, import and distribution, and post-marketing surveillance. China imposes price and reimbursement controls generally, and in particular on narcotic and psychotropic drugs. We also note that China’s regulatory environment is highly fluid. The government has modified many policies affecting certain aspects of drug approval in the last year and legislative and policy changes are expected to continue regularly for the next two to three years. Our potential activities in China may touch upon the jurisdiction of many agencies but the primary regulators will be the China Food and Drug Administration, the National Health and Family Planning Commission, and the National Development and Reform Commission, as well as various authorities at ports of entry.

Environmental

Our operations, like those of other pharmaceutical companies, involve the use of substances regulated under environmental laws, primarily in manufacturing processes and, as such, we are subject to numerous federal, state, local and non-U.S. environmental protection and health and safety laws and regulations. Certain environmental laws assess strict (i.e. can be imposed regardless of fault) and joint and several liability on current or previous owners of real property and current or previous owners or operators of facilities for the costs of investigation, removal or remediation of hazardous substances or materials at such properties or at properties at which parties have disposed of hazardous substances. These agencies may require that we reimburse the government for costs incurred at these sites or otherwise pay for the cost of investigation and clean-up of these sites, including compensation for damage to natural resources. Environmental laws are complex, frequently amended and have generally become more stringent over time.

Manufacturing

Active Pharmaceutical Ingredients

The active pharmaceutical ingredients used in our products are manufactured at the Fine Chemical Plant (“FCP”) located in Hull, United Kingdom. Ownership of the FCP was transferred from RB Health, a member of the RB Group, to Indivior in April 2015. The employees working at the FCP have also transferred to the Indivior Group.

The FCP manufactures the buprenorphine hydrochloride (“HCl”) active pharmaceutical ingredient used in the formulation of SUBUTEX ®  Tablet, SUBOXONE ®  Tablet, SUBOXONE ®  Film, TEMGESIC ®  and BUPRENEX ® . The FCP has the capacity to produce all our current buprenorphine HCl requirements with approximately 35% available capacity remaining. The FCP utilizes caustic materials as part of the manufacturing process, as well as a thermal reaction; however, these aspects of the process are tightly controlled and, we believe, represent low risk to the surrounding environment. Following the transition of

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FCP control to the Indivior Group, we now produce buprenorphine HCl for use in the manufacture of SUBUTEX ®  Tablet, SUBOXONE ®  Tablet, SUBOXONE ®  Film, TEMGESIC ®  and BUPRENEX ® .

The naloxone HCl active pharmaceutical ingredient is procured mainly from two suppliers for both SUBOXONE ®  Tablet and SUBOXONE ®  Film. Supply of naloxone HCI for SUBOXONE ®  Tablet is single-source while supply for SUBOXONE ®  Film is dual-source.

Buprenorphine HCl and products containing buprenorphine HCl are classified as controlled narcotics and require permits for import and export. An annual importation assessment value for buprenorphine HCl and products containing buprenorphine HCl is set by each importing country through the INCB. Once the assessment value has been reached for a given country, no additional import permits may be issued unless proper justification for an assessment value increase is provided to the respective country’s governing body, which reports to the INCB. While this process has not impacted product supply to our patients in the past, it presents a manufacturing and product supply risk that must be monitored closely.

Tablet and injection products

As part of the Demerger, we entered into a seven year supply agreement with RB Health, whereby RB Health assumed responsibility for the formulation, compressing, and finished good packaging of SUBUTEX ®  Tablet and SUBOXONE ®  Tablet, as well as the formulation, filling, and terminal sterilization of TEMGESIC ®  and BUPRENEX ® .

SUBOXONE ®  Film

SUBOXONE ®  Film is manufactured under an exclusive license and supply agreement with MSRX signed in August 2008. Under the terms of the agreement, MSRX is the global exclusive manufacturer and primary packager of SUBOXONE ®  Film and is prohibited from developing any other film product containing buprenorphine without our written consent. The agreement expires upon expiry of the last MSRX patent to expire. Both buprenorphine HCl and the naloxone HCl are supplied free of charge by RB Health to MSRX to be used in the manufacture of SUBOXONE ®  Film.

MSRX has two manufacturing facilities located in Portage, Indiana. Manufacture and primary packaging of all SUBOXONE ®  Film output for the U.S. market is now approved at both facilities. Manufacture and primary packaging of SUBOXONE ®  Film output for the Rest of World is currently approved at one facility.

Serialization and secondary packaging of SUBOXONE ®  Film is performed by a third party in the United States, Australia and the United Kingdom, under a supply agreement that expires in December 2016 and provides that such third party shall be the exclusive supplier for volumes up to 8,800,000 cartons annually. We are in negotiations to extend this contract beyond 2016.

All finished SUBOXONE® Film product is shipped to our U.S. third-party distribution service provider and either distributed for sale within the United States or exported to other markets where it is approved for sale.

RBP-6000

RBP-6000 is a buprenorphine depot product currently in Phase III development.  We have entered into a development agreement for the formulation and filling of RBP-6000.  We intend to agree to terms of a commercial supply agreement prior to launch of the product.

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Sales, Marketing and Distribution

The extent of our focus on sales, marketing and distribution during the periods under review in this document is demonstrated by the fact that selling, marketing and distribution expenses constituted the largest category of our expenses, accounting for $166 million in 2015 (2014: $147 million; 2013: $160 million) (Q1 2016: $32 million; Q1 2015: $38 million). Please refer to “Item 5. Operating and Financial Review and Prospectus” of this document for further details of selling and distribution expenses.

Our three largest customers (who are wholesale pharmaceutical companies in the United States) accounted for 76% of global gross sales in 2015 which equated to 71% of our net revenues (2014: 75% of global gross sales, which equated to 69% of our net revenues; 2013: 75% of global gross sales, which equated to 70% of our net revenues), 71% of our net revenues in Q1 2016 and 70% of our net revenues in Q1 2015. Our largest customer accounted for 28% of our net revenues in 2015 (2014: 28 %; 2013: 28%), 28% of our net revenues in Q1 2016 and 28% of our net revenues in Q1 2015.

Competition

The introduction of generic or branded products that compete with the Indivior Group’s products could impact the market share of the Indivior Group’s products and pricing and, therefore, its results of operations. The introduction of generic products typically leads to a loss of sales of a branded product and/or a decrease in the price at which branded products can be sold. In addition, legislation enacted in the United States allows for, and in a few instances in the absence of specific instructions from the prescribing physician mandates, the dispensing of generic products rather than branded products where a generic version is available.

The Indivior Group currently faces competition from generic and branded products in various markets. In the United States:

·                   The Company is aware of certain competitors who are developing products or have recently launched (Braeburn’s Probuphine Implant) which may compete with RBP-6000. Such products may impact the market share which could be obtained by RBP-6000 (assuming receipt of FDA approval and a successful commercial launch)  as well as the pricing which could be obtained for this product, which, in turn, could affect the Group’s results of operations.

In addition, during the periods under review, the following developments affected the Company’s market share in the US:

·                   Two manufacturers launched generic alternatives to SUBOXONE ®  Tablet in March 2013 and have since together gained a mid-teen share of the market

·                   A branded buprenorphine and naloxone sublingual tablet was introduced in September 2013 and has gained a share of approximately 4.5% (based on volume (mg)) of the buprenorphine market in the United States.

·                   In June 2014, the FDA approved a third generic alternative to SUBOXONE ®  Tablet, which was launched in August 2014.

·                   In September 2014, the FDA approved a fourth generic alternative to SUBOXONE ®  Tablet, which was launched in December 2014.

·                   At the end of 2015 a fifth generic buprenorphine/naloxone tablet was approved and entered the market in January 2016.

·                   BDSI launched its branded buccal film product, BUNAVAIL TM , in November 2014. In September 2014, the Indivior Group filed a patent infringement lawsuit against BDSI and, in anticipation of launching its product and being sued by the Indivior Group, BDSI filed a protective declaratory judgment action against the Indivior Group and MSRX in September 2014 seeking a declaratory judgment of non-infringement and invalidity of three patents relating to SUBOXONE ®  Film . Please refer to “Item 8.A. — Legal Proceedings” for further details of the patent infringement lawsuit and related litigation.

In the EU, the Indivior Group’s market share of buprenorphine (based on volume (mg)) stayed relatively consistent from 70% in 2014 and 2015 to 71% in Q1 2016 and 70% in Q1 2015.

Sales and marketing

Our current commercial activity in the United States is entirely dedicated to SUBOXONE ®  Film. Our sales organization in the United States comprises over 250 trained and experienced pharmaceutical professionals many of whom also have clinical backgrounds. This includes 198 clinical liaisons whose primary role is to educate physicians and their staff in both the treatment of addiction as a disease as well as the science of SUBOXONE ®  Film. We believe that the quality of relationships creates ease of access to, and time with, physicians within their offices. The clinical liaisons also act as a vital link between the various stakeholders within the addiction community, including key opinion leaders, counsellors, treatment advocates, pharmacists, nurses and healthcare providers in specialized treatment centers. These activities are supported by dedicated and experienced professionals in our managed care group who create access to treatment for patients by partnering with U.S. commercial payors and federal and local governmental payors.

In the rest of the world, our commercial activities are currently dedicated to SUBUTEX ®  Tablet, SUBOXONE ®  Tablet and SUBOXONE ®  Film. Depending on the size and demands of each of the markets, there are dedicated teams of clinical liaisons, health policy liaisons, or a combination of both, so as to accelerate access to treatment for patients.

Our commercial activities also include marketing and related services and commercial support services, utilizing the expertise of third-party vendors such as advertising and PR agencies, market research organizations, and other sales support-related services. In addition, we have established strong marketing expertise in disease state and treatment awareness, embedded in various platforms including grassroots, digital and traditional media. Our products are predominantly distributed by the major wholesalers in each country who supply both independent pharmacies and national pharmacy chains.

                                                In each of our markets, our commercial activities are further supported by strategic planning, business analytics and measurement, and quarterly territory plans, ensuring that each market and sales territory is effectively resourced to maximize market access, and to deliver our market growth commitments.

Distribution

At present, we distribute our products globally using contracted third-party distribution services. In the EU, we utilize 22 distribution partners across 31 countries. In North America, we utilize two distribution partners, one in the United States and one in Canada. In all the markets outside of North America and Europe in which we sell our products, we use nine distribution partners across 12 countries.

Intellectual Property

We own or license a number of patents and patent rights in the United States and other countries covering or relating to certain of the products and pipeline products mentioned above, and have created brand names and also registered trademarks where appropriate for our products. Generally, and where possible, we rely upon patent protection to ensure market exclusivity for the life of the patent. We consider the overall protection of our patents, trademarks and license rights to be of material value and acts to protect these rights from infringement or misuse

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where appropriate.

The majority of an innovative product’s commercial value is usually realized during the period in which the product has market exclusivity. In the branded pharmaceutical industry, an innovator product’s market exclusivity is generally determined by two forms of protection: patent rights held by the innovator company; and any regulatory forms of exclusivity to which the innovator is entitled. In the United States and some other countries, when market exclusivity expires and generic versions of a product are approved and marketed, there are often very substantial and rapid declines in the branded product’s sales. The rate of this decline varies by country and by therapeutic category; however, following patent expiration, branded products often continue to have some market viability based either upon the goodwill generated by the product name, which typically benefits from trademark protection, or upon the difficulties associated with replicating the product formulation or bioavailability.

Patents are a key determinant of market exclusivity for most branded pharmaceuticals as they can provide the innovator with the right to exclude others from practising an invention related to the product. Patents may cover, among other things, the active ingredient(s), various uses of a drug product, pharmaceutical formulations, drug delivery mechanisms, and processes for (or intermediates useful in) the manufacture of products. Protection for aspects of individual products extends for varying periods in accordance with the expiry dates of patents in the various countries. The protection afforded, which may also vary from country to country, depends upon the type of patent, its scope of coverage and the availability of meaningful legal remedies in the country.

Many developed countries provide certain non-patent incentives for the development of pharmaceuticals. For example, the United States, EU and Japan each provides for a minimum period of time after the approval of certain new drugs during which the regulatory agency may not rely upon the innovator’s data to approve a competitor’s generic copy. Regulatory exclusivity is also available in certain markets as incentives for research on new indications, orphan drugs (drugs that demonstrate promise for the diagnosis or treatment of rare diseases or conditions) and medicines that may be useful in treating pediatric patients. Regulatory exclusivity is independent of any patent rights and can be particularly important when a drug lacks broad patent protection. However, most regulatory forms of exclusivity do not prevent a second innovative competitor from gaining regulatory approval prior to the expiration of regulatory exclusivity when the second innovative competitor has conducted its own safety and efficacy studies on its drug, even when that drug is identical to that marketed by the first innovator.

We estimate the likely market exclusivity period for each of our branded products on a case-by-case basis. It is not possible to predict with certainty the length of market exclusivity for any of our branded products because of the complex interaction between patent and regulatory forms of exclusivity, the relative success or lack thereof of potential competitors’ experience in product development and inherent uncertainties concerning patent litigation. There can be no assurance that a particular product will enjoy market exclusivity for the full period of time that we currently estimate or that the exclusivity will be limited to the estimate.

We also own, or license, patent rights (i.e. granted patents or pending applications) in certain key jurisdictions in respect to our products and pipeline products. The patent rights listed below are those which are critical to our products and the primary product candidates in our pipeline:

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(1)           Date listed reflects the date of the latest expiring patent (not accounting for any patent term extension).

Historically, our business has been materially dependent upon a group of owned and in-licensed U.S. and non-U.S. patents relating to SUBOXONE® Film. As announced by us on June 3, 2016, in a judgment issued on June 3, 2016 in respect of our first Orange Book patent infringement lawsuits against Actavis and Par, the District Court in Delaware found that Actavis’ and Par’s ANDA products infringe the asserted claims of U.S. Patent No. 8,603,514, one of our Orange Book listed patents for SUBOXONE® Film, and that the asserted claims of U.S. Patent No. 8,603,514 are not invalid. The Court also ruled that the asserted claims of U.S. Patent No. 8,017,150, which is set to expire in 2023, are valid, but that they are not infringed by Actavis’ or Par’s ANDA products. The Court found that the asserted claims of U.S. Patent No. 8,475,832 are invalid, but that certain of the claims of this patent would be infringed by Actavis and Par’s ANDA products if they were valid.  On June 28, 2016, Par filed a notice of appeal of the District Court of Delaware’s rulings.

In addition to patents and regulatory forms of exclusivity, we also market products with trademarks. Trademarks have no effect on market exclusivity for a product, but are considered to have marketing value. Trademark protection continues in some countries as long as used; in other countries, as long as registered. Registrations of such trademarks are for fixed terms and subject to renewal as provided by the laws of the particular country.

Furthermore, and while not a patent right, we also have regulatory exclusivity for SUBOXONE ®  Tablet in the EU.

The Indivior Group is involved in on-going litigation relating to its intellectual property portfolio, the outcome of which may have a material and adverse effect on our ability to enforce our intellectual property. See “Item 3.D. Risk Factors — We may incur substantial costs as a result of litigation or other proceedings relating to patents and other intellectual property rights, and we may be unable to protect our rights to, or commercialize, our products.” For more information, please refer to “Item 8.A. —Legal Proceedings.”

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C.                                     Organizational Structure

The Company is the ultimate holding company of the Indivior Group. The following table sets out details of the Company’s significant subsidiaries:

D.                                     Property, Plant and Equipment

The following table contains information regarding existing or planned material tangible fixed assets owned or leased by the Indivior Group.

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