A class action lawsuit was filed against West Pharmaceutical Services (WST) by Levi & Korsinsky on May 5, 2025. The plaintiffs (shareholders) alleged that they bought WST stock at artificially inflated prices between February 16, 2023, and February 12, 2025 (Class Period) and are now seeking compensation for their financial losses. Investors who bought West Pharmaceutical Services stock during that period can click here to learn about joining the lawsuit.
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West Pharmaceutical Services provides innovative, high-quality injectable solutions and services to companies in the pharmaceutical, biotechnology, and generic drug industries. The company’s products include equipment and devices ranging in complexity from syringes, stoppers, and plungers to auto-injectors and self-injection platforms.
The company’s failure to inform investors about the significant and ongoing destocking across its high-margin, high-value product (HVP) portfolio is at the heart of the current complaint.
West Pharmaceutical Services’ Misleading Claims
According to the lawsuit, West and three of its senior executives (the Defendants) repeatedly made false and misleading public statements throughout the Class Period. Particularly, they are accused of omitting truthful information about the extent of the destocking of certain products, and ancillary issues, from SEC filings and related material.
During the Class Period, the defendants constantly reiterated the contribution of the company’s HVP portfolio to the overall business performance. For instance, in a press release, the CEO stated that the company was committed to a capital spending program aimed at expanding its HVP manufacturing capacity to stay ahead of rapidly growing customer demand.
Additionally, during an earnings call on July 27, 2023, the CFO stated that West Pharmaceutical Services was experiencing continued growth in HVP products excluding COVID-related sales, which was positively impacting its margins.
Finally, while presenting at the Bank of America Global Healthcare Conference on September 14, 2023, WST’s CFO noted that he was very encouraged by the company’s ability of maintaining revenue growth, continued margin enhancements, and navigating through inflationary periods.
However, subsequent events (discussed below) revealed that the defendants had failed to inform investors that WST’s high-margin growth product, SmartDose device, was hurting the company’s profit margins due to operational inefficiencies.
Plaintiffs’ Arguments
The plaintiffs maintain that the defendants deceived investors by lying and withholding critical information about the business and prospects during the Class Period. Importantly, the defendants are accused of misleading investors about the destocking challenges affecting the company’s HVP portfolio.
The information became clear on February 13, 2025, when West Pharmaceutical Services released a disappointing revenue and earnings forecast for fiscal 2025. The company attributed the weak outlook to Contract Manufacturing headwinds, including the loss of two major continuous glucose monitoring (CGM) customers.
Moreover, WST announced that its SmartDose wearable injector devices would be “margin dilutive” in 2025 and that the company would be taking steps to improve its economics, with “all options on the table.” The news triggered immediate negative reactions from both shareholders and analysts, dragging down WST’s stock price by 38.2% that same day.
To conclude, the company misled investors about the ongoing destocking challenges in its high-margin, high-value product portfolio and the impact on the company’s margins and financial projections. Owing to these issues, WST’s stock has declined 31.3% so far this year.
