Earnings Beat at Mylan - Analyst Blog

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Mylan, Inc. 's ( MYL ) fourth quarter 2011 earnings (excluding special items) of 53 cents per share beat the Zacks Consensus Estimate by 3 cents and the year-ago earnings by 8 cents per share. Higher revenues led to the rise in earnings in the final quarter of 2011. On a reported basis (including special items), the generic player earned 30 cents per share as opposed to 1 cent in the year-ago quarter.

The Fourth Quarter in Details

Revenues climbed 7% to $1.53 billion but fell short of the Zacks Consensus Estimate of $1.55 billion. Mylan reports revenues from two segments: Generics and Specialty. Generics sales (after adjusting inter-segment revenues) increased 4.6% to $1.43 billion in the reported quarter. Generic third party net sales, derived from sales in North America, Europe, Middle East & Africa (EMEA), and the Asia Pacific, climbed 4.9% to $1.42 billion in the final quarter of 2011. Third party revenues from the Specialty segment increased 39% to $105.2 million.

Third party net sales declined in EMEA, but grew in other markets like Asia-Pacific and North America. Third party net sales in North American markets climbed 13.8% to $737.1 million in the reported quarter. The increase was mainly attributable to new product launches coupled with favorable volumes on existing offerings. 

Third party net sales from the EMEA market declined 12.5% to $347.4 million. The decline was mainly attributable to pricing and volume pressure in European markets. Third party net sales in the Asia Pacific market climbed 10.8% to $337.9 million. Mylan's Generics business should continue performing well due to its robust generic pipeline. Third party net sales from the Specialty division climbed 39.6% to $104.7 million, benefiting from increased sales of the EpiPen Auto-Injector.

Adjusted gross margins improved to 48% (from 47%), mainly due to new product launches in North America in the Generics division coupled with favorable pricing for EpiPen.

Research and development expenses declined approximately 7.3% to $76.1 million in the reported quarter. Selling, general and administrative expenses rose 7.8% to $301.0 million. 

Annual Results

For the full year 2011, Mylan earned (excluding special items) $2.04 per share, 4 cents above the Zacks Consensus Estimate and 43 cents above the 2010 earnings of $1.61 per share. 2011 revenues climbed 12% to $6.13 billion, slightly below the Zacks Consensus Estimate of $6.15 billion. Both segments performed well during the year.

Mylan, which competes with generic players like Teva Pharmaceutical Industries Limited ( TEVA ) and Watson Pharmaceuticals Inc. ( WPI ), intends to provide guidance for 2012 among other things during its meeting with investors later today.

Our Take

Mylan is one of the leading players in the US generics market. The company holds immense potential as many blockbuster drugs have begun to go off-patent and many more will lose patent exclusivity in the next few years.

Moreover, we are encouraged by Mylan's geographic reach and product depth along with a robust generic product pipeline. We believe the generics segment will post strong sales in 2012 benefiting from a slew of product launches lined up.

MYLAN INC ( MYL ): Free Stock Analysis Report
TEVA PHARM ADR ( TEVA ): Free Stock Analysis Report
WATSON PHARMA ( WPI ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: MYL , TEVA , WPI

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