Generic drug price slump’s latest victim: Mylan
For the last five years, Mylan executives have gotten up in front of investors every year and said they could bet on one thing — that the maker of generic drugs would hit at least $6 in earnings per share in 2018.
That’s not going to happen.
On Wednesday, Mylan cut its adjusted earnings forecast for next year to $5.40 a share. It’s the latest stumble in the genericdrugs industry during a period of falling drug prices, political scrutiny and takeovers by Mylan and its competitors that either couldn’t be consummated or turned out not to work as well as hoped.
“It’s clear they can’t achieve it,” David Maris, an analyst with Wells Fargo, said of the old target. “The fact they can’t make that tells you things must be bad.”
Mylan shares closed Wednesday near their lowest price since 2013 and are down 16 percent this year. The drugmaker also cut its 2017 projection and reported adjusted second-quarter earnings that fell short of analysts’ estimates. It blamed falling generic drug prices and slower-than-expected approvals by regulators for the reductions.
“To say that times are changing would be an understatement,” CEO Heather Bresch said during a call with investors, where she said the company’s future was strong despite the forecast cut.
Mylan has invested outside of traditional generics and said Wednesday it hoped to quickly resolve an issue with regulators about a copy of an asthma inhaler it’s developing.
“The generic as well as the entire health care industry is now at an inflection point,” she said.
The company said sales of its EpiPen emergency allergy shot fell more than expected in the wake of increased competition and the release in December of an authorized generic. Mylan started selling the generic to compete with its own brand name product amid public outcry and congressional scrutiny over the spiraling cost of the EpiPen.
Last year, EpiPen controlled some 95 percent of the auto-injector market. Mylan’s market share has since eroded to around 70 percent, including sales of the EpiPen and the authorized generic, the company told analysts in the conference call Wednesday.
Tim Chiang, an analyst at BTIG who rates Mylan shares buy, said Mylan is the latest company hit with generics drug pricing troubles in the U.S. Earlier this month, Teva Pharmaceutical Industries slashed its forecast, said it would pull back from 45 markets and cut jobs.
Distributors including Cardinal Health and AmerisourceBergen Corp. have also struggled with falling prices for the products.