Profit collapse sees Mayne dive 11%

INVESTORS have turned on Mayne Pharma after the pharmaceutical company issued a lacklustre trading update, warning profit has fallen heavily.

Mayne yesterday said that its gross profit in the four months to October had dropped by a third.

The company, which declined to issue a full-year earnings forecast, cited the pressures of a volatile US market as it delivered the trading update at its annual meeting in Melbourne.

Revenue for the four months fell 16 per cent to $153.6 million, while gross profit dipped 33 per cent to $72.3 million as disruption in the US generic drugs industry continued to take a toll. The group did not reveal its net profit for the period.

Mayne shares fell 11 per cent, or 6c, on the update, ending the session at 48.5c. The slide means they are down more than 50 per cent over the past year.

Chair Roger Corbett expressed his disappointment in the performance, which follows a doubling of the company’s net loss last financial year as impairments cut into the bottom line.

“Your board and management team, who are significant shareholders in Mayne Pharma, are well aware of this and remain focused and highly motivated to turn around performance and generate shareholder value,” Mr Corbett said.

Mayne’s difficulties follow its fraught expansion into the US generic drugs market, where it bought Teva Pharmaceutical Industries and Allerga in 2016.

The group slumped to a net loss of $280.8 million during the year to June in an “extremely challenging” time for the US generic medication market and wrote $351.7 million off the value of its assets.

Mayne says it is confident the medium-term outlook will be improved by a 20-year supply and licence agreement with Belgium-based Mithra Pharmaceuticals to commercialise a new contraceptive pill.