Mylan Laboratories (MYL)

The Economic Times  8 hrs ago  Comment 
The two companies had strongly contended that due processes had been followed in securing the approvals for their products.
The Hindu Business Line  Apr 27  Comment 
“We are aware that the order places certain limitations with respect to packaging and labelling, but intend to challenge those limitations. We have filed an appeal.”
The Hindu Business Line  Apr 26  Comment 
Court disallows Biocon, Mylan and Reliance Lifesciences to claim their drug as bio-similar
Benzinga  Apr 26  Comment 
Perrigo Company plc Ordinary Shares (NYSE: PRGO) shares plunged after the company announced a change in CEO and reduced its EPS guidance for 1Q and FY16, citing Rx pricing pressure, lower expectations from Omega and fewer new product launches....
MarketWatch  Apr 25  Comment 
Perrigo Co.'s lowered profit outlook, as a result of pricing pressures caused by increasing competition, is weighing on the shares of its generic competitors. Shares of Mylan N.V. slumped 3.9% and of Allergan PLC shed 1.5%. Among others in the...
The Economic Times  Apr 21  Comment 
We were second to enter the US in the marketing of a generic version of AstraZeneca's heartburn drug Nexium, but we still managed to build a market share of 35-40% .
Forbes  Apr 13  Comment 
The most recent short interest data has been released by the NASDAQ for the 03/31/2016 settlement date, and we here at Dividend Channel like to sift through this fresh data and order the underlying components of the Nasdaq 100 by "days to cover."...
Benzinga  Apr 6  Comment 
Mylan NV (NASDAQ: MYL) announced in early February it had entered into an agreement to acquire Sweden-based Meda. Following the breakup of Pfizer Inc. (NYSE: PFE)'s proposed merger with Allergan plc Ordinary Shares (NYSE: AGN), investors are...
Benzinga  Apr 6  Comment 
Mylan Inc (NASDAQ: MYL) has rolled out the generic version of ViiV Healthcare's Epivir tablets in the United States, according to a new press statement. The tablet, Lamivudine, would be available in 150 mg and 300 mg in the market. The company...




 
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Mylan Laboratories (MYL) is the third largest manufacturer of generic pharmaceuticals in the United States.[1] Until 2007, MYL was a relatively small player in a market dominated by giants Teva and Sandoz, Novartis' generics division. Mylan lacked its competitors' economies of scale and couldn't compete as effectively on price. The company also had limited international exposure, with only $3 million (less than 1% of total sales) in revenue coming from Europe in 2006.

In 2007, however, MYL made two transformational acquisitions. It acquired Merck's generic business, effectively doubling its revenues and giving it a significant presence in fast growing European generics market. Earlier in the year, MYL also acquired, a controlling interest in Matrix, an Indian pharmaceutical ingredients manufacturing firm, significantly expanding its manufacturing capacity while lowering its manufacturing costs. The downside to these acquisitions is that they were mostly funded by debt, and the interest expense associated with them, combined with the cost of integrating the two acquisitions, the Merck business in particular, will depress margins until 2009 [2].

Mylan pursues patent challenges more aggressively than most of its competitors. Rather than waiting for patents to expire, Mylan files challenges which, when successful, allow it to produce the "challenged" drug for 180 days without other generic competition. This strategy, however, comes with the risk of increased exposure to lawsuits and counter-action by the brand manufacturers. MYL has paid $100 million in direct legal and settlement costs from 2003 to 2007. This figure does not include lost revenues from the interruption of sales for drugs that are already in production.

Business Financials

Mylan’s products fall in a wide range of therapeutic categories. It makes 170 drugs in 400 different dosages. 14% of MYL's 2007 revenue came from its sales of calcium channel blockers, primarily its drug nifedipine, and another 19% of revenues came from narcotic agonist analgesics, such as fentanyl. The company currently has 65 applications with 13 “first-to-files” which would mean 180 days of generic marketing exclusivity if successful [3].


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Mylan Annual Report[4]

Key Trends and Forces

  • Unique aggressiveness in patent challenges allows exclusivity: Generic drugs are equivalents of brand name products, and they can be made under two conditions. When a patent on a drug expires, other companies can then produce that drug. Alternatively, a generic company can challenge a brand name drug and claim that parts of it should not be protected under patent. When this occurs and the generic manufacturer wins the challenge, it gets 180 days of exclusivity in which only it can produce the drug. As of March 31, 2007, Mylan had 13 separate applications for generic drugs filed with the FDA, which, if approved, would grant the company 180 days of exclusivity.[5] Pharmaceutical patents are generally short, and the process for gaining FDA Approval for a generic drug is much less rigorous than for a new medication. Often, generic manufacturers only have to prove that their product is equivalent; they do not have to go through the lengthy and expensive process of clinical trials. Thus, many generic manufacturers will wait for the patents to expire.
    However, companies such as Mylan, Barr, Teva, and others use the second option and try to challenge patents early. To pre-empt this, brand selling companies will attempt to reformulate products to maintain the patents. By adding new ingredients or changing the formula slightly, patent life can be extended, or brand domination can be maintained through the new formula. A new trend, however, involves the company selling the drug to a generic manufacturer before the challenge so that the drug goes generic and the 180 period of exclusivity is limited. This strategy means that challenging patents becomes less attractive as the returns are potentially minimized greatly. Mylan is known for its aggressiveness in challenging patents, and it is yet to be seen how Mylan and other generic producers will react to this new trend.
  • Expansion of manufacturing potential and new markets through acquisition of competitors: In May of 2007, Mylan acquired Merck’s generic business, at a cost of $6.7 billion. Mylan also purchased a controlling stake in Matrix, an India-based drug manufacturer. These moves have increased Mylan's manufacturing capabilities; it went from being a small company to a significant player with these acquisitions. Larger economies of scale allow Mylan to better compete with other major manufacturers; it can produce more product at cheaper prices and compete at price levels that were untenable before.
  • In addition to its expanded manufacturing capabilities, Mylan's expansion has opened up vast new markets, in Europe especially but also the rest of the world. Sales jumped from only $2 million in Europe in 2006 to almost $51 million in 2007. Similarly, though not as strikingly, sales rose from $3 million in the rest of the world in 2006 to $14 million in 2007.[6]
  • Aggressiveness has a price; more lawsuits: Part of being a generic manufacturer means dealing with the "edge" of patents. That is, there is likely a gray area between when a product is protected by patent and when it is not. Because of this, companies such as Mylan often face law suits from brand manufacturers. Brand companies can also file a suit claiming patent infringement which would stop generic production temporarily, even if there were not necessarily infringement. This delaying tactic can be very costly, both in legal terms and in terms of lost production time. Mylan is involved in several legal proceedings; two notable ones include challenges regarding possible fraudulent pricing schemes and an antitrust case. Mylan's has paid around $100 million since 2003. This number is not particularly high, but doesn't account for the losses associated with producing the drug that then could not be sold.

Competition

Mylan's 2007 acquisition of Merck's generics business gives it the scale to compete with some Teva and Novartis' Sandoz. Just as Mylan is particularly aggressive in its patent challenges, so is Teva. The giant had 28 challenges filed in 2007, with 15 tentative challenges, compared to Mylan's 13.

Company Annual Reports
Company Annual Reports[7]
Company Annual Reports
Company Annual Reports[8]

Mylan faces competition both from generic and brand name drug producers. Some of its top competitors include:

  • Teva Pharmaceutical Industries (TEVA). Teva Pharmaceuticals USA is one if the largest producers of generic drugs. Its products include therapeutic areas such as anti-infective, cardiovascular, oncology, dermatological and anti-inflammatory.
  • Barr Pharmaceuticals (BRL): BRL manufacturers both generics and brand name drugs, with about 75% of its sales in generics. Its main product line is contraceptives, and it is dominant in this market.
  • Sandoz, a generic division of Novartis AG (NVS). Sandoz's major therapeutic areas include antibiotics, preparations for treating the central nervous system, cardiovascular, hormones and antiallergics.
  • Dr. Reddy's Laboratories (RDY) is one of the largest generic manufactures in the US by revenue. It also manufactures branded products. Dr. Reddy's products include those for hypertension, allergies, urological disorders, cardiovascular, and antibiotics.





References

  1. Mylan 2007 10-K pg. 4
  2. Barron's Online, "Mylan's" Acquisition Gambit," October, 10, 2007
  3. Mylan 2007 10-K pg. 6
  4. Mylan 2007 10-K pg. 31
  5. Mylan 2007 10-K, pg. 6
  6. Mylan 2007 10-K, pg. 73
  7. Watson 2007 10-K pg. 38, Mylan 2007 10-K pg. 31, Teva 2007 20-F pg. 3, Barr 2007 10-K pg. 45, Novartis 2007 20-F pg. 90
  8. Mylan 2007 10-K, Teva 2007 20-F, Novartis 2007 20-F
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