EUR 850.00 For Business Accounts Only

Morningstar | Mylan: Reduced Confidence in Ability to Achieve Prior Expectations, $20 FVE

Founded in 1961, Mylan started out as a small drug distributor and evolved into a contract manufacturer of penicillin tablets and dietary supplements and was later recognized for manufacturing Dyazide, a diuretic and most prescribed drug in the United States at the time. The company entered the generic market with the passage of the Hatch-Waxman Act in 1984. In 1987, Mylan made its first acquisition, a manufacturer of Parkinson’s drugs with drug discovery capabilities. Since then, the company has made more than a dozen acquisitions, including Matrix Laboratories and EpiPen. Currently, Teva, Sandoz (a subsidiary of Novartis), and Mylan account for approximately half of generic sales in the U.S. and Europe. The balance of the market is highly fragmented. Low-cost manufacturers have grown rapidly as they actively compete for the less differentiated commodity generic drugs in the U.S., where regulatory hurdles are lower than in European countries. The company generates revenue of $11 billion annually and is roughly 40% smaller than its closest competitor, Teva.As a leading global generic manufacturer in an industry undergoing dramatic changes, Mylan has also been one of the most controversial publicly traded healthcare companies. With the rapid decline in the North American generic market because of pricing pressures, the entry of generic competition for its largest specialty drug, EpiPen (treatment for anaphylaxis), a Food and Drug Administration warning letter on one of its facilities, congressional allegations of price gouging of EpiPen, and a high debt load, shares have declined from the June 2015 high of about $75. Mylan shares have not been affected as much as its closest peer, Teva, most likely due to its smaller exposure to North America and lower debt load. Further, Mylan has been slightly more insulated with the generic launch of Advair, a complex respiratory drug, and Copaxone (treatment for multiple sclerosis), and recent progress in developing biosimilars. Generally, management is more closed off, and the limited transparency into its specialty pipeline, which it shared previously, has been eliminated.