Mylan Posts Loss, Hurt by Lower EpiPen Volumes, Charge Related to Settlement
November 09 2016 - 05:50PM
Dow Jones News
Mylan NV swung to a quarterly loss as it booked a big charge
related to a settlement with authorities on contentious pricing of
its EpiPen, and revenue growth came in below expectations as
volumes of the lifesaving auto-injector fell.
Still, shares added 1.1% after hours to $39.35. Earlier in the
day, the stock had joined a rally among pharmaceutical companies
following Donald Trump's victory in Tuesday's presidential
election. Mylan shares closed up 4.9% at $38.92, lifted on
expectations that Mr. Trump's election and Republican control of
Congress would lessen the chances of government restrictions on
drug prices—a prospect that seemed on the rise in response to a
public backlash against escalating prescription costs over the past
few years.
During the quarter, Mylan took a $465 million charge in the
quarter to settle a Justice Department investigation into whether
Medicaid overpaid for EpiPens. The investigation was just one
headache for Mylan following the EpiPen pricing controversy. To
blunt criticism, Mylan said it would sell a generic EpiPen at half
the price of the brand-name treatment.
As Mylan's best-selling product with fat profit margins, EpiPen
has catapulted its specialty drug revenue. Analysts expect it to
hit $1.35 billion this year, more than double what it was five
years ago. The September quarter is the most crucial time of year
for EpiPen sales as children, the main customers, go to summer camp
and then return to school. But on Wednesday Chief Executive Heather
Bresch said while EpiPen scripts grew quarter-over-quarter, volumes
were down due to the lack of wholesaler purchases in the quarter in
anticipation of the coming generic launch.
Although the branded EpiPen is Mylan's top-selling product, the
company's portfolio is dominated by generic medicines. The copycat
drugs are supposed to be low-price, but many saw significant price
increases in recent years. Now, their costs have become a target of
health insurers and drug-benefit managers.
On Wednesday, President Rajiv Malik said Mylan continues to see
pricing across the generics portfolio in line with
expectations.
"We continue to anticipate price erosion in the mid-single
digits for the remainder of the year," he said.
In all for the latest quarter, Mylan posted a loss of $119.8
million, or 23 cents a share, compared with a profit of $428.6
million, or 83 cents a share, a year earlier.
Adjusted earnings fell to $1.38 a share. Revenue climbed 13% to
$3.06 billion. Analysts were looking for $1.45 in adjusted earnings
per share on $3.12 billion in revenue, according to Thomson
Reuters.
Generic drugs revenue rose 17% to $2.61 billion, lifted by
Mylans's acquisitions of Swedish rival Meda AB and the generic and
specialty topicals business of Renaissance Acquisition Holdings.
Meanwhile, sales in its smaller specialty business fell 4.4% to
$418.7 million, on lower EpiPen volumes.
Mylan backed its guidance for adjusted earnings this year, cut
last month to between $4.70 and $4.90 this year, down from $4.85 to
$5.15 previously, due to its responses to the recent controversy
over the high price of the company's lifesaving EpiPen treatments.
It also said it couldn't give full-year guidance for 2016 given
uncertainty over items such as litigation settlements and the
expenses related to its purchase of Meda for $7.2 billion.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
November 09, 2016 17:35 ET (22:35 GMT)
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