With share prices tumbling and a massive drug-price fixing lawsuit hanging over its head, Mylan’s future is looking increasingly spooky. Could a modest acquisition help turn the tide?
It's willing to try and find out. The Pennsylvania drugmaker will shell out $130 million for Aspen Pharmacare’s portfolio of prescription and over-the-counter products in Australia and New Zealand as part of a distribution deal the companies signed in December.
The Aspen acquisition comes at a troubled time for Mylan as the company’s stock prices dwindle on the heels of a 7% revenue slide in the first quarter, tough competition in the generics field and payer pricing pressure—not to mention a price-fixing lawsuit that implicates 20 generics makers in what Connecticut Attorney General William Tong called “most likely the largest cartel in the history of the United States.”
A Mylan spokesperson could not immediately be reached for comment.
The 47-state lawsuit followed a years-long probe into generic price collusion that has roped in Mylan, Teva, Pfizer and Novartis’ Sandoz unit, among others, and has nabbed guilty pleas from two former Heritage Pharmaceuticals execs who turned state’s evidence in the investigation.
More than 100 drugs were targeted in the lawsuit, with state prosecutors saying companies referred to the generic market as the “sandbox” where they were supposed to “play nice.” According to Bloomberg, Mylan had its own “step away from your desks” moment when federal officials raided the company’s headquarters in September 2016.
Mylan could face fines in the $500 million to $2 billion range, UBS analysts said last week. And as Wells Fargo analyst David Maris wrote in a Friday note, the lawsuit has investors buzzing.
However, Mylan’s legal troubles are only the tip of the iceberg as its revenue slips and key rollouts languish. On top of questionable management decisions—including the company effectively paying board chairman Robert Coury nearly $1 million for not using the corporate jet—analysts said investors are right to be worried about Mylan’s future.
In his Friday note, Maris said Mylan’s stock had dropped 10% on the week, casting a shadow over the company’s future financial performance. Maris targeted the company’s Q1 revenue drop—to $2.5 billion from $2.68 billion the same period last year—as a sign that profitability could be a tall task.
“To us, Mylan’s issue is not so much ‘sustaining’ growth, but getting to growth,” he said.
But the hits keep on coming, with Mylan’s Advair generic underperforming sales expectations with a 0.7% COPD market share drop last week.
Mylan priced its copy, branded as Wixela Inhub, at a 70% discount to the GlaxoSmithKline blockbuster’s list, a move analysts said looked aggressive on the surface but was actually less impressive given Advair’s own confidential discounts.
The massive discount on Wixela followed the company’s huge list price slash for its generic Copaxone, which it lowered in 2018 from $5,000 per month to $1,900 per month. One analyst said the change “made no commercial sense” and could only be effective as “optics.”