There is no respite for Grifols. The Catalan plasma derivatives multinational has been dragging for months a major price crisis due to the high level of indebtedness, which has forced it to restructure its leadership and momentarily set aside the family relief in the most responsible position. This decision, at the beginning of October, stopped the fall in the valuation of the titles, but for a few days the market has punished the company again, with the culmination this Friday of a sinking of up to 8% of its shares. The reason is the millionaire lawsuit that it faces in the US, where at least 54,000 blood donors in the State of Illinois have articulated a collective lawsuit against the company for breaching the data protection law. The pharmaceutical company was aware of this conflict since the first individual lawsuit was notified in June 2020. In the 2021 accounts, it already contemplated a “potential collective action” by this group of donors, and a possible fine of $1,000 per donor, although In the report, Grifols highlighted that “the applicable regulations had been fully complied with”. A recent court ruling in favor of the donors, in which Grifols’ arguments were dismissed, has fueled the threat and scared off investors.
In a communication to the National Securities Market Commission, Grifols has tried this Friday to stop the fall of the Stock Market after the information of The Economist that includes the ruling of the US court and the evolution of the donors’ class action lawsuit. “This case was correctly documented in the audited financial reports for 2021 and the first half of 2022,” the company recalls. The company stresses that the court’s decision “does nothing more than allow the plaintiffs’ case to proceed.” […] However, there is still no determination on the validity of these facts, and this is not a final decision.” Grifols assures that he has arguments of merit for his defense, and explains that he has not made provisions in his accounts in relation to this case “due to its lack of materiality.”
The demand of those affected is based on the alleged violation of privacy when the company entered the fingerprints of the donors in a database when they arrived at the blood collection points. The plaintiffs allege that this was done without their authorization, that it was used to track donations, and that the data was not subsequently destroyed. In its pleadings before the US District Court for the Northern District of Illinois, the company argued that the FDA, the US Food and Drug Administration, requires a registry of donors. The court said the privacy law takes precedence over plasma collection regulations, noting that a photograph was enough, without the need for fingerprints. He also noted that the forms they had donors sign did not contain complete information about the use of these data.
By allowing the case to proceed, the plaintiffs can articulate their claims in a class action lawsuit. For now, the 54,000 plaintiffs are donors from Biomat, a Grifols company that has three centers in Illinois; but the donors of the five Talecris establishments or those of the two of Interstate Blood, companies also controlled by the Catalan company, could join the demand. A trial in September against the railway company BNSF Railway for fraudulently obtaining fingerprints, in which the plaintiffs were found to be right, sets an important precedent for the Grifols case, in which fines can range from 1,000 to 5,000 dollars per complainant, so the final sum can be a millionaire hole for a company that is now going through a bad time.
Grifols is going through a bad run on the stock market that has worsened in recent months. Since it reached its maximum price, in February 2020, just before the pandemic (when the share was worth 34.19 euros), the valuation has fallen by 76% until this Friday. So far this year, the drop is 52%. Grifols, for years a value in full expansion and a symbol of international growth for Spanish companies, is now suffering a perfect storm. Accustomed to growing through acquisitions (the latest, the German Biotest for 1,100 million euros) that it financed with a debt that it returned without problems thanks to the cash flow generated by its business, the pandemic cut short this progression (due to the drop in blood donors). due to restrictions).
The company’s liabilities, amounting to nearly 9,000 million euros, became a problem for investors, to the point that the S&P agency downgraded Grifols’ debt rating due to slower deleveraging than expected. This aggravated the price crisis and triggered corporate movements, which at the beginning of October resulted in the departure of the non-executive chairman of the group, Víctor Grifols Roura, and the signing of Steven Mayer as the new chairman with executive functions.