Shares of generic drugmakers plunged late Thursday, after Bloomberg reported that the U.S. Department of Justice was on the verge of issuing criminal charges for suspected price collusion.
The DOJ's investigation has been under way for at least two years and a number of companies have reported receiving subpoenas related to the investigation.
Also mentioned in the Bloomberg report, shares of Lannett(LCI) - Get Report , fell 26.6% to $17.25, Impax Laboratories Inc. (IPXL) , landed at 16.50, down 19.51% and Taro Pharmaceutical(TARO) - Get Report , ended the day down 7.29% to $93.68.
Shares of Allergan(AGN) - Get Report , which disclosed in 2015 that it had received a subpoena from the DOJ, dropped to $188.82, down 4.58%. Allergan's announced at the time that the DOJ was "seeking information relating to the marketing and pricing of certain of the Company's generic products and communications with competitors about such products."
Lumping Allergan with other companies that might be caught up in the investigation is unfair, said Jim Cramer, TheStreet's founder and manager of the Action Alerts PLUS portfolio, which owns AGN.
"The news is another destructive hit to the pharma group that had been riddled with skepticism thanks to the election and rhetoric over price-gouging. Now with the generics in play, investors are again painting the entire sector with one brush, giving no company the benefit of the doubt," he said.
Teva, another company hit by the news, closed its acquisition of Allergan's generics drug business in August.
As part of the sale, Allergan received an ownership stake in Teva. "This is the only link that Allergan has to this business -- the company completely sold out of its generics business," Cramer said. "So while we are still awaiting more details on today's news, Allergan's exposure to any potential DOJ action should end with its link to Teva shares."
Teva said it has been cooperating with authorities on the matter.