Little-known Lannett tops Fortune's fastest-growing list, thanks to big price hikes

The fastest-growing pharma company these days also happens to be the fastest-growing company, period. But that speed-racing drugmaker isn't anywhere close to the top of pharma's name-recognition lists.

According to Fortune's latest ranking of fastest-growing companies, the generics maker Lannett ($LCI) beats all comers, pharma and otherwise. The 73-year-old company, based in Philadelphia, posted record sales in 9 consecutive quarters and delivered a 3-year annual growth rate, earnings-wise, of 314%. Its 2014 revenue amounted to $274 million.

That's an unfamiliar feat in pharma these days, where much lower growth rates are the norm. But to achieve that growth, Lannett has used a familiar strategy: Price hikes. And that strategy could be under threat.

Even in the world of less-expensive generics, drugs aren't necessarily cheap, and Lannett operates in some niches where it faces little competition, according to analysts. Lannett's prices on cardiovascular and migraine meds more than doubled last year, with 150% and 124% increases, Fortune notes. In fact, its aggressive pricing has put Lannett under the Department of Justice's microscope; the company has said it has received subpoenas in a federal investigation of potential collusion on pricing.

Sen. Bernie Sanders

And that DOJ probe is just one risk Lannett--and its rivals--could face to their pricing freedom. U.S. lawmakers have lambasted generics makers for hiking prices and called on the Department of Health and Human Services to investigate. In a recent letter, Sen. Bernie Sanders said HHS would review quarterly prices for the top 200 generics from 2005 to 2014, where price increases topped inflation. Meanwhile, the DOJ's investigation is widening. Allergan ($AGN) recently disclosed a subpoena issued to its generics business Actavis.

Lannett might also find itself targeted for a buyout. With bigger generics makers on the prowl for deals, analysts have tagged the smaller company as a potential acquisition.

In all, 9 pharma companies rated a spot on the magazine's fastest-growing list, with a second drugmaker--Gilead Sciences ($GILD)--joining Lannett in the top 10. Gilead's mushrooming fortunes are much better known, what with skyrocketing sales of the high-profile hep C drugs Sovaldi and Harvoni. Gilead's pricing on those meds has of course played a role in the company's growth, much to the consternation of payers.

Gilead's 3-year earnings growth rate came to 67%, with a 3-year annual growth rate of 43%. Thanks to rising stock prices, the company delivered 3-year growth in total returns of 66%. Joining Gilead and Lannett in the top 100 were Ligand Pharmaceuticals (in 19th place), Illumina (28th), Alexion Pharmaceuticals (51st), Biogen (72nd), Sucampo Pharmaceuticals (78th), Taro Pharmaceutical Industries (89th) and Anika Therapeutics (90th).

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