Blue Orca Hits Fertilizer-Focused FMC With Short Report - What's Going On?

Blue Orca Capital is short on FMC Corporation FMC, noting that the company has not disclosed its recent legal setbacks worldwide. The report says, "The dam has broken."

This situation has arisen at a particularly unfavorable moment for FMC, as its revenues have already been severely impacted by a global oversupply of inventory. 

FMC recently reported a 30% Y/Y decline in revenue, and this is before generic competition is expected to intensify in key markets, setting the stage for a challenging second half of 2023, with the potential for a significant downturn rather than a recovery, the report adds.

The short report adds that FMC has misled investors by suggesting that it would not encounter generic competition for its flagship diamides. 

In reality, due to recent adverse legal rulings, generic alternatives have already entered important markets in India and China and are poised to do so in Brazil. 

Blue Orca says an investigation has identified numerous legal competitors, including industry giants, actively producing and selling generic variants of FMC's top-selling insecticide in FMC's most critical markets, often at substantially reduced prices. 

For example, in China, these competitors offer generics up to 80% lower than FMC's branded equivalent. 

In India, the Delhi High Court recently found FMC guilty of deceptive practices before the court and the patent office, leading well-funded rivals to introduce generic versions of FMC's leading CTPR product at discounted rates. 

These competitors are projected to capture 40-50% of FMC's CTPR diamide market share in India within the next year.

Price Action: FMC shares are down 7.72% at $75.85 on the last check Thursday.