Mylan needs some serious help, and it's looking at its options—like selling off assets, or even the whole company—to keep shareholders happy. But it may not have that many options.
The generics giant has assembled a strategic review committee and is “actively evaluating a wide range of alternatives” for its business that’ll boost shares. CEO Heather Bresch said Wednesday that the panel will be looking at all its alternatives. "There is no thing not on the table. I think that we'll be looking at everything," she said.
But the way Wells Fargo’s David Maris sees it, “selling Mylan for parts” won’t “result in a much higher valuation.” And selling off the entire company—which investors seem to think will come out of every strategic review—ain't gonna happen, he figures.
“We think the prospect of asset sales at higher prices than they were acquired (such as Meda) is unlikely, and if sales were at lower prices, it may not meet the goal of unlocking value,” he wrote in a note to clients, adding that, “We do not think there is a high likelihood that a public or private buyer for the company or significant parts of the company emerges.”
One potential reason? Mylan’s got problems. While the company pointed the finger at U.S. markets for continuing “to underappreciate and undervalue the durability, differentiation and strengths of Mylan’s global diversified business,” analysts were quick to point to problems of Mylan’s own making, such as troubles at a Morgantown, West Virginia, manufacturing facility. And then there's what Bernstein’s Ronny Gal called “slower” than expected approvals and uptake for the company’s complex generics.
“The U.S. business has been hit twice—once by the broader industry trends” affecting generics makers and “then by company-specific action,” Gal wrote.“We believe the company is continuing to face fundamental issues,” Maris added, pointing to second-quarter results that both he and Gal called labeled “weak.”
So what’s next for Mylan? With no available timetable for the review, not much is clear yet, except that sales growth isn’t in the cards for 2018. The company expects revenue for the year to check in between $11.25 billion and $12.25 billion, which is “essentially flat at the mid-point versus full-year 2017,” it said.