Another Generic Launch at Mylan - Analyst Blog

By Zacks | December 31, 2012 AAA

Mylan Inc. (MYL) recently announced that it has launched its generic version of Teva's (TEVA) Nordette 28 Tablets (levonorgestrel and ethinyl estradiol - 0.15 mg and 0.03 mg). The company started shipping the product following the receipt of final US Food and Drug Administration (FDA) approval by its partner, Famy Care Ltd. Nordette is approved for the prevention of pregnancy in women. It contains 28 pills which are to be taken at the same time every day. According to IMS Health, Nordette generated US revenues of approximately $60.4 million for the 12 months ending September 30, 2012.

This launch would enhance the women's health care franchise of Mylan. The company is currently seeking approval for 34 oral contraceptives and expects to gain approval for some of these products in the first quarter of 2013.

Mylan had 185 ANDAs pending FDA clearance, targeting $80.6 billion in sales annually. Mylan believes that about 35 of these pending abbreviated new drug applications (ANDAs) are first-to-file opportunities, representing $21.2 billion in branded sales. The revenue figures are as per IMS Health for the 12 months ending June 30, 2012.

Our Recommendation

We are encouraged by Mylan's geographic reach and product depth along with a robust generic product pipeline. However, we remain concerned about the company's performance in the Europe, Middle East and Africa (EMEA) region.

Additionally, as most of the large branded drugs are due to lose patent exclusivity within the 2017-2018 period, we have little visibility on the growth prospects of generic companies like Mylan beyond that timeframe.

In view of these challenges we see limited upside from current levels and maintain our Neutral recommendation on Mylan. The stock carries a Zacks #2 Rank (Buy) in the short run.

Dr. Reddy's Laboratories (RDY), another generic player, currently holds a Zacks #1 Rank (Strong Buy).

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