The FDA is speeding up generics approvals. It’s just not speeding up the ones Mylan needs.
Wednesday, the knockoffs giant said it would remove copies of big guns—Copaxone from Teva and Advair from GlaxoSmithKline—from its 2017 guidance, pushing them into 2018 instead. It now expects revenues to hit between $11.5 billion and $12.5 billion for the year, down from a previous range of $12.25 billion to $13.75 billion.
The company pointed the finger, in part, at regulators. CEO Heather Bresch told investors on the company’s Q2 conference call that Mylan expects “approval delays to persist this year as the FDA continues to reorganize and adapt its process and priorities.”
In June, Mylan said it received an “information request” from the FDA over its version of Teva’s 20 mg multiple sclerosis blockbuster, a product that was already long delayed at the time. That event followed a March rejection of its Advair copy, which spurred a complete response letter from regulators.
As Mylan insists, though, its problems—at least with Copaxone—are nothing but “a timing issue.”
“There’s no science we are dealing with any more,” company president Rajiv Malik said on the call. “It’s perplexing ... this whole reorganization within the FDA is coming into play.”
The FDA has taken big steps toward increasing the number of generic rivals in order to fight high drug prices; in June, it posted a list of off-patent meds with little or no competition and said it would prioritize reviews for copies of meds that have fewer than three approved generic attackers.
As Malik told investors, though, while the agency has sped up the process for approving second, third and fourth generics for a reference product, approvals for first generics haven’t gotten any speedier—especially for the complex kind Mylan’s aiming to bring to market.
Still, Mylan sees those complex products as key to weathering the price-erosion storm that’s been wreaking havoc in the U.S. generics market.
“If we just stick within the United States, the diversity of your product portfolio, I think, is incredibly important,” Bresch said, adding that “diversity within a segment absolutely helps maintain” the high margins the generics industry has traditionally been used to.
The way she sees it, those complex launches will come and eventually help the company withstand the industry-wide challenges and “come out stronger,” she said.
For now, though, Mylan’s numbers aren’t looking so hot. Adjusted EPS of $1.10 missed quarterly expectations of $1.16, while revenues of $2.96 billion came in short of consensus $3.08 billion forecasts. In addition to generics price erosion, declining EpiPen revenues also played a roll in the miss, Mylan said.
“First look: not good,” Wells Fargo analyst David Maris wrote to clients after seeing the company’s earnings report. “Expect material weakness today,” Evercore ISI’s Umer Raffat cautioned his own clients.