Mylan Gains Generic Approval – Analyst Blog

Matrix Laboratories, a subsidiary of Mylan (MYL), recently received final approval from the US Food and Drug Administration (FDA) for its generic version (gabapentin) of Pfizer’s (PFE) Neurontin, a treatment for postherpetic neuralgia. Gabapentin tablets had US sales of about $174 million for the twelve months ending March 31, 2010.

 

In the past few months, Mylan has received approval for other significant drugs, including for Valtrex, GlaxoSmithKline’s (GSK) treatment for herpes virus infection, Boehringer Ingelheim’s benign prostatic hyperplasia (BPH) treatment, Flomax; Lundbeck’s Desoxyn, and generic versions of Glaxo’s smoking cessation aid Zyban.

 

Mylan received a noteworthy FDA approval for HIV treatment as well. The company received approval under the President’s Emergency Plan for AIDS Relief (PEPFAR) for the generic version of Bristol Myers Squibb‘s (BMY) HIV treatment, Videx.

 

Mylan is a leading player in the generics market. Currently, Mylan has 140 Abbreviated New Drug Application (ANDAs) pending FDA approval, representing $95.5 billion in annual brand sales, according to IMS Health. Among these, 40 are potential first-to-file opportunities, representing $21 billion in annual brand sales.

 

Given the strength of Mylan’s generics portfolio, the company recorded a 7% increase in revenues during the first quarter of 2010. The company re-affirmed its 2010 EPS guidance in the range of $1.50 to $1.70 and expects to generate total annual revenue of about $5.45 billion to $5.75 billion.

 

Mylan has been in an acquisitive mode in the past few years, which should help it expand its footprint in ex-US markets and drive long-term growth. Moreover, the company being one of the leading players in several markets holds immense potential, since many blockbuster drugs are slated to lose patent exclusivity in the near future.

 

We have a Neutral recommendation on the stock.