Good News for Mylan - Analyst Blog

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Mylan Inc. ( MYL ) recently entered into a settlement agreement with Orion Corporation to resolve the patent litigation in relation to the generic version of Orion's Comtan (entacapone tablets: 200 mg). Comtan is approved for the treatment of patients suffering from idiopathic Parkinson's disease, showing symptoms of end-of-dose "wearing-off".

The settlement of the dispute allows Mylan to launch its generic version of Comtan any time after March 31, 2013. As per data released by IMS Health, the annual sales of entacapone tablets for the twelve months ending September 30, 2012 came in at $104.9 million.

The generic segment at Mylan is its primary growth engine. The segment received some encouraging news recently when the US Food and Drug Administration (FDA) approved Mylan's Abbreviated New Drug Application (ANDA) for Quinine sulfate capsules USP (324 mg), the generic version of privately held Mutual Pharmaceutical Company's Qualaquin capsules.

Qualaquin capsule is approved for the treatment of uncomplicated plasmodium falciparum malaria. As per IMS Health, Quinine Sulfate Capsules' annual sales, for the twelve months ending September 2012, came in at around $31.9 million.

We remind investors that the company received several approvals for its ANDAs in the recent past. Still, Mylan has around 178 ANDAs pending for FDA approval. These pending ANDAs are worth up to $79.2 billion in annual sales as per IMS Health. Out of these 178 ANDAs, 35 are potential first-to-file opportunities representing $21.2 billion in annual brand sales for the year ended June 30, 2012.

Our Take

We are encouraged by Mylan's geographic reach and product depth along with a robust generic product pipeline. However, we remain concerned about the company's lackluster performance in the Europe, Middle East and Africa (EMEA) region.

Additionally, as most of the large branded drugs are due to lose patent exclusivity within the 2017-2018 period, we have little visibility on the growth prospects of generic companies like Mylan beyond that timeframe.

We currently have a Neutral recommendation on Mylan. The stock carries a Zacks #2 Rank (Buy) in the short run. Pharma stocks that carry a Zacks #1 (Strong Buy) Rank include Dr. Reddy's Laboratories Ltd. ( RDY ).

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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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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