Monday, Australia’s Mayne Pharma broke some dour news to shareholders.
A portfolio of 42 generic meds it acquired from Teva and Allergan last summer wouldn’t be meeting 2017 sales guidance thanks to a “tough pricing deflation cycle” in the U.S. copycat market.
"Mayne Pharma is not immune," CEO Scott Richards said, as quoted by The Age. "This is probably as tough as it's been."
While the announcement sent shares spiraling and lopped $200 million off Mayne’s market cap, it hardly comes as a surprise to the industry watchers who have been tracking generics damage for a while now.
Last September, then-Teva generics CEO Siggi Olafsson detailed the sector's price erosion problems and laid out a launch-heavy strategy for offsetting them—a plan that didn’t pan out, forcing the company to walk back its 2017 sales guidance by more than $1 billion.
In February, Endo recorded a $3.5 billion write-down, thanks in large part to the “quickly evolving new realities of the U.S. generics external environment,” as company CFO Blaise Coleman put it.
Several analysts were quick to point out that the first-quarter performance from Novartis’ Sandoz—the second-leading player in the generics space—spelled more bad news in the knockoffs arena. The drugmaker posted pricing erosion of 8%, which Wells Fargo analyst David Maris said he believes was “the largest negative impact from pricing in recent quarters.”
Given that Sandoz’ biopharmaceuticals segment—which includes biosimilars, biopharmaceutical contract manufacturing and Copaxone generic Glatopa—grew 30% overall, “we believe that the U.S. price erosion in commodity generics may have been even worse,” Maris wrote to investors, forecasting a painful read-through to biggies including Mallinckrodt, Teva, Mylan and Perrigo.
RBC Capital Markets’ Randall Stanicky agreed in his own note to clients that Sandoz’s showing didn’t exactly inspire hope for a turnaround. “Sandoz results do not appear to be a needed positive catalyst for the sector, and we remain cautious on both outlook and 1Q for several names,” he wrote recently, adding that “we think it will be hard for the sector to outperform until the near-term P&L outlook improves.”