Mylan Continues Slide As Generic Price Slowdown Hits Results, Outlook
Shares of Mylan (MYL) are sliding after the company reported worse than expected earnings for the quarter and cut its financial outlook for 2017 and 2018, citing a price slowdown in generic drugs. This comes just days after the stock was under pressure following a similar announcement from peer Teva Pharmaceutical (TEVA), which cut its own view and lowered its dividend as the prices it can charge for its generic products in the U.S. has been plunging.
MYLAN RESULTS: This morning, Mylan reported second quarter earnings per share of $1.10 and revenue of $2.96B, below consensus of $1.16 and $3.04B, respectively. The company also said it now sees 2017 adjusted earnings per share of $4.30-$4.70 and revenue of $11.5B-$12.5B. For 2018, the company cut its adjusted earnings per share view to at least $5.40 from $6.00.
CHALLENGING GENERIC ENVIRONMENT: Mylan said this morning that given ongoing challenges and the uncertain U.S. regulatory environment, "we have elected to defer all major U.S. launches from our full year 2017 financial guidance to 2018, including generic Advair and generic Copaxone." Furthermore, the company noted that it sees generic price erosion for 2017 of mid-single digits globally. "We [...] expect generic price erosion for the year of mid-single digits globally, with high-single-digit erosion expected in North America. Furthermore, we continue to make great progress on our key pipeline programs, and while we may experience delays, mostly in the U.S., in realizing some of these opportunities, our confidence in our ability to bring these important products to market and maximize their potential has not changed," it added. Mylan CEO Heather Bresch pointed out that, "Our industry, along with the entire healthcare sector, is at an inflection point. This is providing investors an opportunity to differentiate between pharmaceutical companies focused solely on generics and/or specialty medicines and those capable of delivering a broad and diverse portfolio across multiple channels in various geographies, which remains Mylan's strategy."
PEER PRESSURE: Back on August 3, when Teva Pharmaceutical reported weaker than expected second quarter results, the company cited the performance of its U.S. Generics business and the continued deterioration in Venezuela as factors for its results and the lowering of its outlook for the remainder of the year. "In our U.S. Generics business, we experienced accelerated price erosion and decreased volume mainly due to customer consolidation, greater competition as a result of an increase in generic drug approvals by the U.S. FDA, and some new product launches that were either delayed or subjected to more competition. Given the current environment, we have had to take swift and decisive actions," Teva interim President and Ceo Yitzhak Peterburg, said.
PRICE ACTION: In morning trading, shares of Mylan are fractionally lower near $32 per share, regaining some of their early losses. Since Teva reported, Mylan shares have declined from their August 2 closing price of $36.92.
Disclosure: None.