News that the Justice Department is preparing criminal charges in its long-standing investigation into generic drug pricing hit those companies hard Thursday afternoon, wiping out $8.5 billion in market value and adding to already-serious worries about the industry’s near-term future, analysts said.

Those fears could be very personal for some company executives. First reported by Bloomberg, the looming legal action threatens not only generics makers, but executives themselves.

The good news: Though the danger is real--and quite significant--analysts and legal experts figure it will be confined to only a few of the 12 companies that have received federal subpoenas.

The fallout

For those generics makers hit with charges, financial penalties are likely to run in the hundreds of millions or more. Based on his research, Bernstein analyst Ronny Gal said most DOJ investigations produce fines of less than $1 billion, but perhaps not in this case. “The argument is that this could be bigger here, given [the] size of the market; that sounds fair,” he said.

On top of that, there’s “the risk that there could be senior management dislocation if executives of the company are found guilty of any wrongdoing,” Leerink Partners analyst Jason Gerberry pointed out.

Until those charges hit--which Bloomberg says could happen by the end of this year--we won’t know whether investors' concerns are overblown. But after more than a year of intense pressure to explain drug pricing, the uncertainty itself is plenty to keep generics makers on the defensive. The investigation also could portend other legal problems, Credit Suisse’s Vamil Divan figures. 

“It is also possible that the outcome of the investigation could lead to an increase in regulations and oversight on the generic industry going forward, leading to longer-lasting challenges,” Divan said Thursday.

Many of the companies listed in Bloomberg’s story declined to comment. Allergan, which recently sold its Actavis generics business to Teva Pharmaceutical Industries, told analysts that any liability transferred to Teva with the sale. Mylan, which previously disclosed its involvement in the probe, said it “is and has always been committed to cooperating with the Antitrust Division’s investigation.”

“To date, we know of no evidence that Mylan participated in price fixing,” spokeswoman Nina Devlin said via email.