Alvotech’s sales story faces a credibility test as manufacturing questions shave enthusiasm and send shares tumbling

Sharp market shock as scrutiny targets Alvotech’s 2025 assurances

Alvotech (ALVO) suffered a rapid loss of investor confidence after an investor law firm publicly flagged what it describes as manufacturing deficiencies that could upend the company’s 2025 revenue and adjusted EBITDA assurances. The claim landed like a thunderbolt: investors had been valuing a near-term ramp of biosimilar sales based on the company’s manufacturing and launch plans, and now those plans look uncertain.

The immediate impact was a steep sell-off in the stock as traders and long-term holders recalibrated assumptions about growth, timing and cost. For shareholders who had been treating the company’s 2025 guidance as reasonably attainable, the claim forces a re-evaluation of both revenue prospects and profit margins for next year.

How Alvotech builds value: the drug at the center and why factories matter

Alvotech (ALVO) is a company that develops and sells biosimilar versions of branded biologic drugs. Its business rests on two linked bets: winning regulatory approval for follow-on biologics, and then making and delivering those complex medicines at scale. That second part — manufacturing — is not a routine factory job. Biologics require tightly controlled processes, specialized facilities and rigorous quality checks. If production stalls, approvals are delayed or product supply is limited, the company’s revenue forecasts and profit margins can shift sharply.

Alvotech’s 2025 guidance was built around several launches and an expected production ramp. Management framed manufacturing capabilities as central to its plan: without steady, compliant output, sales timing slips and costs rise. Investors liked the company’s near-term picture because a successful roll-out would convert the pipeline into predictable cash flow. The new scrutiny cuts straight to that conversion: producing doses reliably is how the company turns years of R&D into sales.

What the law firm is alleging and what it wants to know

The investor law firm’s public filing raises specific concerns about alleged manufacturing deficiencies at Alvotech’s facilities or contractors. Its claims point to problems with production practice and oversight and question whether the company adequately disclosed those issues to shareholders ahead of issuing firm 2025 assurances.

The firm cites a timeline of alleged lapses and points to documents and testimony it says support its case; it is asking for an investigation into whether the company misled investors. At the heart of the allegation is disclosure: did Alvotech know of problems that could have made the 2025 guidance too optimistic, and did it fail to tell the market?

These public claims typically aim to lay groundwork for shareholder litigation and to pressure the company into providing more detail. In many cases like this, the firm will request internal documents and communications and may solicit shareholders to join a suit if the company’s response is unconvincing.

Market fallout and the new reality for 2025 revenue and adjusted EBITDA

The market moved quickly to price in greater risk. The stock’s plunge reflects three immediate worries: launches could be delayed, initial supply could be constrained, and extra costs — from rework, remediation and regulatory follow-up — could hit margins. That combination is poisonous for revenue and adjusted EBITDA in the short term.

Analysts and investors should now assume that optimistic timing is less likely. If manufacturing hiccups force slower launches, 2025 sales could be materially lower than the company’s assurances. Even if product eventually reaches market, unit costs may rise while one-time remediation expenses drag adjusted EBITDA downward. In short: the probability of a miss to management’s 2025 picture has increased, and the market has already moved to reflect that elevated risk.

For holders, this is a high-risk scenario where upside is compressed until the company proves it can reliably produce and ship product on schedule. For traders, the move creates volatility and creates room for a reassessment of valuation multiples that had banked on a smooth manufacturing ramp.

What regulators and the courts are likely to do next

When a company’s disclosure is publicly questioned in this way, regulators and plaintiffs’ attorneys will often take notice. The SEC typically reviews whether public statements, filings and investor communications matched the facts the company knew. That review can lead to inquiries or demands for documents. Separately, the firm’s action may kick off or accelerate shareholder lawsuits alleging misleading statements.

Regulatory probes and civil suits take time. You can expect initial filings and company responses within weeks, followed by document discovery and potential administrative back-and-forth with relevant health regulators if product quality or compliance is at issue. Investors should treat these steps as multi-month developments that will shape the company’s near-term narrative.

Concrete watchlist for investors: the signals that will reveal whether the hit is temporary or structural

Focus on a short list of high-value signals. First, watch for a clear company response — an 8-K or press statement that addresses the specific allegations with facts and timelines. A vague denial or silence is a negative signal; a detailed rebuttal or corrective plan is a positive one.

Second, track regulatory notices. Any FDA or European regulator inspection outcomes, warning letters, or production holds change the odds significantly. Third, monitor upcoming earnings calls and guidance updates where management must answer tough questions about timing and costs. Fourth, look for material changes in supply agreements, third-party manufacturer statements, and internal audit results disclosed to the market.

Finally, size exposure cautiously. Until Alvotech demonstrates stable, compliant production and transparent disclosure, the stock lives under heightened legal and operational risk. For investors who remain optimistic about the company’s long-term market position, the path back to confidence is clear but narrow: verifiable manufacturing fixes, regulatory clearance of those fixes, and consistent sales delivery against guidance.

Sources

• prnewswire.com