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The healthcare sector has once again grabbed the spotlight due to exorbitant drug pricing. Generic drug maker, Mylan N.V.’s shares crashed almost 12% after the company drew flak for over pricing epinephrine auto-injector, EpiPen, which is approved for the treatment of severe allergic reactions.
Earlier this week, a couple of U.S. senators raised questions about the company's massive price hike of EpiPen. While one of the senators asked for details of the massive price hike of the product in the recent years among other issues, another urged the Federal Trade Commission to investigate into the company for a likely antitrust violation regarding the issue.
Mylan had acquired EpiPen from Merck KGaA (MKGAF - Free Report) in 2007, following which the product’s cost has skyrocketed over 400%. As per news reports, Mylan has hiked the price of a pack of two EpiPens from $100 in 2008 to the present level of $500, with some customers reportedly paying $600 or more.
Making matter worse, Democratic Presidential candidate Hillary Clinton even posted a tweet, saying “EpiPens can be the difference between life and death. There's no justification for these price hikes." Reeling under pressure from the issue, the company yesterday announced plans to improve access to EpiPen by expanding the existing programs for patients who are bearing the high expenses. Under this plan, Mylan will double the eligibility for its patient assistance program, which will slash out-of-pocket costs for uninsured and under-insured patients and families.
Similar Controversies Faced by Peers
But Mylan is not the first company to come under scanner for overpricing drugs. While exorbitant drug prices and the lack of affordability of prescription drugs have always been there, price hiking suddenly came to the forefront late last year. Privately held Turing Pharmaceuticals raised the price of Daraprim from $13.50 to $750 per pill in a single shot, thereby attracting public attention as well as criticism. The company had acquired the U.S. rights to Daraprim from Impax Laboratories Inc. in Aug 2015.
The price increase didn’t go down well with Hillary Clinton then either, whose “price gouging” tweet led to a major sell-off in the healthcare sector, cutting short the phenomenal run of health care stocks, particularly in the biotech sector.
Valeant Pharmaceuticals International, Inc. was another major company to fall out of favor with investors because of the same issue.
What’s to Happen Next
It has been widely believed that lack of competition allowed Mylan to raise the price of EpiPen. Auvi-Q has been off the markets since last October, while Teva Pharmaceutical Industries Ltd. (TEVA - Free Report) failed to even receive an approval for its generic version of EpiPen earlier this year. On the bright side for Teva, the controversies surrounding Mylan could now push regulatory agencies to expedite the approval of generic versions of the drug.
Against this backdrop, Mylan currently has a Zacks Rank #3 (Hold). Here, we have picked three stocks using our style score system. Not only do these stocks have a solid VGM score ('V' for Value, 'G' for Growth and 'M' for Momentum) of ‘B’, but they also have a favorable Zacks Rank #1 (Strong Buy) or #2 (Buy).
The VGM score rates each stock on their combined weighted styles, helping to identify those with the most attractive value, best growth, and most promising momentum, across the board.
Philadelphia, PA-based Lannett Company, Inc. develops, manufactures, packages, markets, and distributes solid oral and extended release (tablets and capsules), topical, nasal, and oral solution finished dosage forms of drugs, which target a wide range of therapeutic areas.
The company is also pursuing partnerships, research contracts and internal expansion for the development and production of other dosage forms including ophthalmic, nasal, patch, foam, buccal, sublingual, soft gel, injectable and oral dosages. This Zacks Rank #1 stock has seen its current year earnings per share (EPS) estimate move 11.64% higher over the past 60 days.
Wilbur Street Lynbrook, NY-based BioSpecifics Technologies Corp. is a biopharmaceutical company that develops injectable collagenase clostridium histolyticum for multiple indications. Injectable collagenase is marketed as Xiaflex in the U.S. for the treatment of Dupuytren's contracture and Peyronie's disease by its partner, Endo International plc . This Zacks Rank #2 stock’s current year EPS estimate has moved up by 9.29% over the past 60 days.
Headquartered in Salt Lake City, UT, USANA Health Sciences Inc. (USNA - Free Report) is focused on the development and manufacture of high-quality, science-based nutritional and personal care products that are distributed internationally through a network marketing system. This Zacks Rank #2 stock has seen its current year EPS estimate move up by 4.92% higher over the past 60 days.
Bottom Line
Regardless of macroeconomic events, drug pricing will remain in focus among policymakers, the media and the public. But instead of focusing on finding someone to take all the blame, emphasis should be on striking a balance between innovation and affordability. With all eyes on the healthcare sector, companies will now become increasingly cautious about drug price hikes. While Mylan attempts to recover from the recent setback, investors could consider these top-ranked drug stocks, which also have a superb Style Score.
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Forget Mylan, Buy These 3 Drug Stocks Instead
The healthcare sector has once again grabbed the spotlight due to exorbitant drug pricing. Generic drug maker, Mylan N.V.’s shares crashed almost 12% after the company drew flak for over pricing epinephrine auto-injector, EpiPen, which is approved for the treatment of severe allergic reactions.
Earlier this week, a couple of U.S. senators raised questions about the company's massive price hike of EpiPen. While one of the senators asked for details of the massive price hike of the product in the recent years among other issues, another urged the Federal Trade Commission to investigate into the company for a likely antitrust violation regarding the issue.
Mylan had acquired EpiPen from Merck KGaA (MKGAF - Free Report) in 2007, following which the product’s cost has skyrocketed over 400%. As per news reports, Mylan has hiked the price of a pack of two EpiPens from $100 in 2008 to the present level of $500, with some customers reportedly paying $600 or more.
Making matter worse, Democratic Presidential candidate Hillary Clinton even posted a tweet, saying “EpiPens can be the difference between life and death. There's no justification for these price hikes." Reeling under pressure from the issue, the company yesterday announced plans to improve access to EpiPen by expanding the existing programs for patients who are bearing the high expenses. Under this plan, Mylan will double the eligibility for its patient assistance program, which will slash out-of-pocket costs for uninsured and under-insured patients and families.
Similar Controversies Faced by Peers
But Mylan is not the first company to come under scanner for overpricing drugs. While exorbitant drug prices and the lack of affordability of prescription drugs have always been there, price hiking suddenly came to the forefront late last year. Privately held Turing Pharmaceuticals raised the price of Daraprim from $13.50 to $750 per pill in a single shot, thereby attracting public attention as well as criticism. The company had acquired the U.S. rights to Daraprim from Impax Laboratories Inc. in Aug 2015.
The price increase didn’t go down well with Hillary Clinton then either, whose “price gouging” tweet led to a major sell-off in the healthcare sector, cutting short the phenomenal run of health care stocks, particularly in the biotech sector.
Valeant Pharmaceuticals International, Inc. was another major company to fall out of favor with investors because of the same issue.
What’s to Happen Next
It has been widely believed that lack of competition allowed Mylan to raise the price of EpiPen. Auvi-Q has been off the markets since last October, while Teva Pharmaceutical Industries Ltd. (TEVA - Free Report) failed to even receive an approval for its generic version of EpiPen earlier this year. On the bright side for Teva, the controversies surrounding Mylan could now push regulatory agencies to expedite the approval of generic versions of the drug.
Medical Sector Price Index
Medical Sector Price Index
Against this backdrop, Mylan currently has a Zacks Rank #3 (Hold). Here, we have picked three stocks using our style score system. Not only do these stocks have a solid VGM score ('V' for Value, 'G' for Growth and 'M' for Momentum) of ‘B’, but they also have a favorable Zacks Rank #1 (Strong Buy) or #2 (Buy).
The VGM score rates each stock on their combined weighted styles, helping to identify those with the most attractive value, best growth, and most promising momentum, across the board.
Philadelphia, PA-based Lannett Company, Inc. develops, manufactures, packages, markets, and distributes solid oral and extended release (tablets and capsules), topical, nasal, and oral solution finished dosage forms of drugs, which target a wide range of therapeutic areas.
The company is also pursuing partnerships, research contracts and internal expansion for the development and production of other dosage forms including ophthalmic, nasal, patch, foam, buccal, sublingual, soft gel, injectable and oral dosages. This Zacks Rank #1 stock has seen its current year earnings per share (EPS) estimate move 11.64% higher over the past 60 days.
Wilbur Street Lynbrook, NY-based BioSpecifics Technologies Corp. is a biopharmaceutical company that develops injectable collagenase clostridium histolyticum for multiple indications. Injectable collagenase is marketed as Xiaflex in the U.S. for the treatment of Dupuytren's contracture and Peyronie's disease by its partner, Endo International plc . This Zacks Rank #2 stock’s current year EPS estimate has moved up by 9.29% over the past 60 days.
Headquartered in Salt Lake City, UT, USANA Health Sciences Inc. (USNA - Free Report) is focused on the development and manufacture of high-quality, science-based nutritional and personal care products that are distributed internationally through a network marketing system. This Zacks Rank #2 stock has seen its current year EPS estimate move up by 4.92% higher over the past 60 days.
Bottom Line
Regardless of macroeconomic events, drug pricing will remain in focus among policymakers, the media and the public. But instead of focusing on finding someone to take all the blame, emphasis should be on striking a balance between innovation and affordability. With all eyes on the healthcare sector, companies will now become increasingly cautious about drug price hikes. While Mylan attempts to recover from the recent setback, investors could consider these top-ranked drug stocks, which also have a superb Style Score.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>