Mylan Inc. (MYL) recently announced that it has entered into a settlement agreement with Sunovion Pharmaceuticals Inc., a subsidiary of Japanese pharmaceutical company, Dainippon Sumitomo Pharma Co., Ltd.
The patent litigation was related to Sunovion’s Brovana, which is approved for controlling the symptoms of chronic obstructive pulmonary disease (COPD), including chronic bronchitis and emphysema.
Sunovion recognized that Brovana infringed two of Mylan’s patents, which are valid till June 22, 2021. The details of the agreement were not disclosed.
Mylan and Sunovion have been involved in a legal tussle in the past. Sunovion had filed an infringement lawsuit against Mylan related to its Abbreviated New Drug Application (ANDA) for Sunovion’s Xopenex (levalbuterol hydrochloride inhalation solution). In February 2012, the jury ruled against Mylan as it found that it had intentionally infringed on Sunovion’s patents. The jury also asked Mylan to pay $18 million to Sunovion for lost profits and royalties.
Meanwhile, Mylan continues to launch new generic drugs. Recently, Mylan’s UK and Italian subsidiaries launched a generic version of Roche Holding’s (RHHBY) osteoporosis drug, Bonviva (ibandronic acid), 150 mg. Bonviva is a coated tablet with a once-monthly recommended dosing.
As of May 23, 2012, Mylan had 173 ANDAs pending clearance by the FDA, targeting $92 billion in sales annually. Mylan believes that about 38 of these ANDAs are first-to-file opportunities, representing approximately $25.5 billion in branded sales. The revenue figures are, as per IMS Health, for the 12 months ending Dec. 31, 2011.
Our Recommendation
We are encouraged by Mylan’s geographic reach and product depth along with a robust generic product pipeline. However, we are concerned about the company’s lacklustre performance in the EMEA region.
Additionally, with most large branded drugs due to lose patent exclusivity within 2017-2018, we have little visibility on the growth prospects for generic companies like Mylan beyond that timeframe.
Thus, we prefer to remain on the sidelines and have a Neutral recommendation on Mylan. The stock carries a Zacks #3 Rank (Hold rating) in the short term.
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