Indivior : Q1 2020 Indivior Financial Results Press Release

May 14, 2020

Q1 2020 Results Announced

Quarter to March 31	2020	2019	% change at	% change at
	$m	$m	actual FX	constant FX
Net Revenue	153	238	-36%	-35%
Operating (Loss)/Profit	(189)	75	NM	NM
Net (Loss)/Income	(163)	66	NM	NM
EPS (cents per share)	(22)	9	NM	NM
Adjusted Operating Profit*	3	102	NM	NM
Adjusted Net (Loss)/Income*	(3)	89	NM	NM
Adjusted EPS* (cents per share)	-	12	NM	NM

*Adjusted (Adj.) basis excludes the impact of exceptional items as referenced in Notes 3 and 4. NM: Not Meaningful.

This Release Contains Inside Information.

The Group increased its provision for investigative and antitrust litigation matters to $621m (previously $438m). Because these matters are in various stages, it is not possible for Indivior to predict with any certainty the potential impact of this litigation or to quantify the ultimate cost of a verdict or resolution, but it could have a material impact on the Group. The Group cannot predict with any certainty whether it will reach an ultimate resolution with the Department of Justice or any or all of the parties to the other matters referred to under the Litigation Update. Please see Notes 9 and 11 beginning on page 22 for further details on legal proceedings and any related provisions.

FY 2020 Guidance

On April 8, 2020 Indivior withdrew its FY 2020 guidance in the face of COVID-19 uncertainty. The Company does not expect to be in a position to provide revised guidance until it has greater clarity regarding the duration and extent of the market disruptions from the COVID-19 pandemic.

Comment by Shaun Thaxter, CEO of Indivior PLC

"Indivior's performance in Q1 was in-line with our expectations as we executed against our strategy. However, at the end of the quarter, we experienced an abrupt change in market conditions as the COVID-19 pandemic began to take effect. Our priorities in this challenging period are to put our people and patients first, to maintain supplies of our medicines to those that need them most and to plan for the potential impacts of COVID-19 across our business. Cash preservation will also remain a key element of our near-term strategy, and as part of our COVID-19 response the Executive Committee has decided that its members will forgo any bonus payment for 2020 associated with the Group's Annual Incentive Bonus Plan (AIP). We continue to actively mitigate enterprise risk, including our ongoing efforts to settle outstanding litigation, for which we took a further provision, and by making further investments in our internal compliance and processes to reflect the new working practices. As we navigate the challenges posed by this global public health crisis, we remain committed to our Vision and patient-focused strategy on behalf of all stakeholders."

Q1 2020 Financial Highlights

• Total net revenue of $153m declined 36% (-35% at constant currency). U.S. net revenue declined 48% as SUBOXONE® (buprenorphine and naloxone) Film share loss (which was at lower rates than analogues1) and the absence of net revenue contribution from the Group's authorized buprenorphine/naloxone generic film program was partially offset by an increase in the underlying growth rate in the oral medication-assisted treatment (MAT) market in the U.S. due to the effects of the COVID-19 pandemic (see "U.S. Market Update" on page 3) and by increased net revenue from SUBLOCADE® (buprenorphine extended-release) injection (Q1 2020: $29m; Q1 2019: $11m). Rest of World net revenue improved 26% primarily due to a prior year one- time net revenue adjustment in Canada and modest volume growth in Australia.

(1) IMS Institute Report, January 2016, "Price Declines after Branded Medicines Lose Exclusivity in the U.S."

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• Reported operating loss was $189m (Q1 2019 operating profit: $75m). Adjusted operating profit was $3m
  (Adj. Q1 2019 operating profit: $102m). The adjusted operating profit reflects lower overall net revenue as well as increased operating expenses (SG&A and R&D combined), principally promotional expenses for SUBLOCADE and legal expenses related to the Department of Justice (DOJ) matter.
• Net loss was $163m (Q1 2019 net income: $66m). Adjusted net loss was $3m (Adj. Q1 2019 net income: $89m), reflecting lower net revenue and increased operating expenses partially offset by tax benefits.
• Cash balance at the end of Q1 was $912m (FY 2019: $1,060m). Net cash was $674m (FY 2019: $821m). The lower cash balances primarily reflect the negative net working capital impact associated with the timing of payables related to Film share loss in government programs.

Q1 2020 Operating Highlights

• U.S. buprenorphine market growth improved to a low teens rate, primarily led by Government channels (see "U.S. Market Update" on page 3 for more detail).
• SUBOXONE Film market share averaged and exited at 22% (Q1 2019 avg. of 48% and exit of 40%). Share erosion continues to be lower than historical industry analogues1.
• SUBLOCADE net revenue of $29m (Q1 2019: $11m); total SUBLOCADE units dispensed were 23,400 (+19% vs. Q4 2019; +148% vs. Q1 2019). PERSERIS® (risperidone) extended release injection net revenue of $3m.
• COVID-19pandemic resulted in sharp reduction beginning in mid-March in patient enrollments for SUBLOCADE and PERSERIS, while SUBOXONE Film continued to show relative market share strength.
• SUBUTEX® prolonged-release solution for injection (100mg and 300mg) approved in Sweden for the treatment of opioid dependence; marks Indivior's first approval of monthly long-acting buprenorphine treatment for opioid dependence in Europe; treatment expected to be available in Q1 2021.
• Positive opinion adopted by the European Committee for Medicinal Products for Human Use (CHMP) on Marketing Authorization Application for SUBOXONE® Film.
• SUBLOCADE (buprenorphine extended-release injection) listed for reimbursement in Canada; SUBLOCADE (buprenorphine modified release solution for injection) listed for reimbursement in Australia.

COVID-19 Response: Prioritizing our People and Patients and Preparing for the Future

Indivior is committed to the safety and well-being of its global employee base, ensuring that patients around the world continue to have access to treatment and building a strong foundation for future growth. To that end, the Group has taken the following actions:

Employees

• Heeding recommended actions by local government and health organizations across the world to contain the spread of COVID-19 and asking employees, other than essential supply manufacturing employees, to work remotely.
• Providing access to resources, tools and training on topics including wellness and remote working.
• Making available free access to employee assistance programs covering legal, parenting, elder care, childcare and mental health support.
• Continuing to practice compliance with all regulatory and safety standards where we conduct business.
• Assessing on a regular basis our global operations on a location by location basis and following the advice of local governments and health organizations to determine when to return each location to business.

Patients

• Ensuring all patients have access to their treatment, including working to comply with the recommended "safety-stock" guidelines across global locations.
• Working closely with key supplier and distribution partners to help ensure continuity of supply of all treatments for opioid use disorder (OUD) and schizophrenia.

1. IMS Institute Report, January 2016, "Price Declines after Branded Medicines Lose Exclusivity in the U.S."

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• Continuing to manufacture buprenorphine at the Group's wholly-owned fine chemical plant.
• Voluntarily producing personal protection equipment (PPE) in the UK for the COVID-19 response effort.

Operational Discipline

• Actively monitoring the dynamic situation and evaluating the ongoing impacts of the COVID-19 pandemic outbreak on its business and operations.
• Preparing business intervention plans to effect if it is deemed necessary, including delaying or reducing capital expenditures that do not compromise regulatory and safety compliance, as well as managing operating expenses across all key areas of spending. As part of its response, the Executive Committee has decided that its members will forgo any bonus payment for 2020 associated with the Group's Annual Incentive Bonus Plan (AIP).
• Preserving the Group's strong balance sheet to ensure liquidity through the COVID-19 pandemic and the ability to accelerate business activity when conditions normalize.
• Throughout these changes to our working practices we have reviewed and adjusted our corporate compliance program to ensure that ethics and standards are maintained.

Department of Justice Action

• On April 9, 2019, a federal grand jury in the Western District of Virginia indicted Indivior PLC and Indivior Inc. on charges of health care fraud, wire fraud, mail fraud, and conspiracy, in connection with the marketing and promotion practices, pediatric safety claims, and overprescribing of SUBOXONE Film and/or SUBOXONE Tablet by certain physicians. DOJ is seeking to recover $3 billion in monetary forfeitures and all assets derived from the commission of the alleged offenses. Indivior believes it has strong defences to the government's charges and will vigorously defend itself. On August 14, 2019, in response to Indivior's Motion to Dismiss the original indictment, DOJ obtained a Superseding Indictment that did not add to or change the charges, but changed certain factual allegations. On November 14, 2019, the Court denied the Motion to Dismiss the original indictment, and on December 19, 2019, Indivior filed a Motion to Dismiss the superseding indictment. On March 31, 2020, the Court denied the Motion to Dismiss the Superseding Indictment.
• The parties entered into an Agreed First Protective Order on February 26, 2020; please see Note 11 for further information.
• The Group increased its provision for investigative and antitrust litigation matters, primarily related to the DOJ, to $621m (previously $438m). The Group determined it was prudent to increase the provision related to these matters to reflect their current status and represents the Group's revised best estimate in accordance with IFRS. Because these matters are in various stages, it is not possible for Indivior to predict with any certainty the potential impact of this litigation or to quantify the ultimate cost of a verdict or resolution, but it could have a material impact on the Group. The Group cannot predict with any certainty whether it will reach an ultimate resolution with the Department of Justice or any or all of the parties to the other matters referred to under the Litigation Update. Please see Notes 9 and 11 beginning on page 22 for further details on legal proceedings and any related provisions.

Operating Review

U.S. Market Update

In Q1 2020, growth of the U.S. market for buprenorphine medication-assisted treatment (BMAT) products increased to a low-teens rate. More recently, BMAT growth has reached mid-teen levels. The increased BMAT growth rate in both the quarter and in the more recent period were primarily driven by an increase in the underlying growth rate in the oral medication-assisted treatment (MAT) market in the U.S. due to the effects of the COVID-19 pandemic. The increase may reflect several new federal and state government actions recently implemented to facilitate access to MAT, including counselling, for patients suffering from OUD in light of the COVID-19 pandemic and social distancing requirements. For example, the Drug Enforcement Administration

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(DEA), jointly with the Substance Abuse and Mental Health Services Administration (SAMHSA), are allowing healthcare providers to initiate and continue buprenorphine treatment by telemedicine and telephone. The Group is uncertain how long the elevated BMAT growth rate will continue, but anticipates the underlying growth rate will revert to the previously observed low double-digit growth rate.

Underlying market volume growth continues to benefit both from increased overall public awareness of the opioid epidemic and approved treatments, and from regulatory and legislative changes that have expanded OUD treatment funding and treatment capacity. States are also realizing that, while providing treatment brings substantial value to both patients and society, BMAT remains under-utilized1.

In response, both the number of physicians who have received a waiver to administer MAT and those able to treat to the permitted level of 275 patients continued to grow in the first quarter of 2020. The number of nurse practitioners and physician assistants who have received a waiver also continued to grow in the first quarter of 2020. Indivior supports efforts to encourage more eligible healthcare practitioners to provide treatment, and the Group continues to resource its compliance program to meet the growing number of BMAT prescribers and patients.

On February 19, 2019, the market for generic buprenorphine/naloxone film products began to form rapidly after the Court of Appeals for the Federal Circuit (CAFC) vacated the preliminary injunction (PI) granted to Indivior against Dr. Reddy's Laboratories (DRL) and Alvogen Pine Brook LLC (Alvogen).

As a result of the launch of generic buprenorphine/naloxone film products, branded SUBOXONE Film experienced significant market share loss in 2019, albeit at a lower rate than suggested by historical industry analogues2. SUBOXONE Film market share exiting the first quarter of 2020 was 22% compared to first quarter 2019 exit share of 40%. Overall formulary access for SUBOXONE Film remains above expectations at this point in the lifecycle of the treatment. However, Indivior prudently assumes the pace of market share loss will intensify for SUBOXONE Film, ultimately resulting in a branded market share position in-line with industry analogues2. However, the exact timing for reaching this level is uncertain at this point.

In Q4 2019, the Group terminated its authorized generic (AGx) buprenorphine/naloxone sublingual film program with Sandoz. Final shipments of Indivior-produced AGx film were made in Q4 2019, which Sandoz continued to market during Q1 2020. The termination of the AGx program has not affected availability of branded or generic buprenorphine/naloxone sublingual film.

Financial Performance in Q1 2020

Total net revenue in Q1 2020 decreased 36% to $153m (Q1 2019: $238m) at actual exchange rates (-35% at constant exchange rates).

U.S. net revenue decreased 48% to $105m (Q1 2019: $200m). Growth in the overall U.S. BMAT market improved to a low-teens rate as discussed above ("U.S. Market Update"). Underlying market strength and SUBLOCADE net revenue growth to $29m (Q1 2019: $11m) were more than offset by SUBOXONE Film share loss due to generic buprenorphine/naloxone film alternatives (launched in Q1 2019) and the absence of net revenue contribution from the AGx film program that was terminated in October 2019.

Rest of World net revenue increased 26% at actual exchange rates to $48m (Q1 2019: $38m) (+31% at constant exchange rates). Rest of World net revenue improved primarily due to a prior year one-time net revenue adjustment in Canada and modest volume growth in Australia.

1. JAMA Network Open. 2019;2(6):e196373. Doi:10.1001/jamanetworkopen.2019.6373
2. IMS Institute Report, January 2016, "Price Declines after Branded Medicines Lose Exclusivity in the U.S."

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