Mylan Expands into Biologics Space

Mylan Inc. (MYL - Analyst Report) entered into a strategic partnership with Biocon Ltd to expand into the area of biotechnology. Biocon has a strong portfolio of biopharmaceutical drugs that include insulin, erythropoietin and monoclonal antibodies. The collaboration will help both companies to develop, manufacture and commercialize generic biotech medicines without duplicating associated costs. The deal mainly focuses on monoclonal antibodies used to treat diseases such as cancer and rheumatoid arthritis.

Mylan develops, manufactures, markets, licenses, and distributes generic, branded, and branded generic pharmaceutical products, as well as active pharmaceutical ingredients (APIs). In order to expand its product line, Mylan has been pretty active in forming strategic alliances with pharmaceutical companies to develop products or to launch distribution and licensing arrangements. After the acquisition of Merck Generics and Matrix Labs, Mylan is now the third-largest generic company in the world.

Mylan has a robust generic product pipeline and the total U.S. generic product portfolio consists of approximately 204 products. As per estimates, $25 billion worth of biologics are due to de-patent by 2016, which throws open a huge market for the generic player. The company intends to focus its development on generic products with significant sales in areas that offer substantial opportunities and other competitive advantages. Mylan is not alone in the race for strategic partnerships, Teva Pharmaceutical (TEVA - Snapshot Report), the Israel-based largest generic drug company is also eyeing suitable acquisitions.

With Matrix and Merck Generics, Mylan should be able to position itself as a leader in the worldwide generics market. The strategic initiatives undertaken by the company in the recent past should aid long-term growth. Mylan currently has almost $453 million in cash and equivalents and access to $750 million committed revolving credit facility. These funds should be sufficient to meet the company’s medium-term requirements. We maintain our Hold rating on the stock.