Mylan's Generic Pipeline Progresses

Mylan Inc. ( MYL - Analyst Report ) recently announced that it has received final approval from the US Food & Drug Administration (FDA) to launch preservative-free thiamine hydrochloride injection for thiamine deficiency. Mylan will market the thiamine hydrochloride injection in 100 mg/ml dose packaged in 200 mg/2 ml multiple dose vials. Mylan has already begun shipping 25 vial packs of thiamine hydrochloride injection.

According to IMS Health, thiamine hydrochloride injection, 100 mg/ml, generated US revenues of approximately $18.6 million for the 12 months ending March 31, 2012.

Meanwhile, Mylan has filed an Abbreviated New Drug Application (ANDA) with the FDA seeking approval for its generic version of Pfizer's ( PFE - Analyst Report ) Pristiq (desvenlafaxine succinate extended-release tablets) in 50 mg and 100 mg dosages. Pristiq is approved for treating adult patients suffering from major depressive disorder (MDD).

According to Mylan, it is one of the first companies to submit an ANDA including a paragraph IV certification. Thus, on final approval, Mylan might get to share a 180-day period of exclusivity.

We note that Pfizer has filed a lawsuit against Mylan in relation to Mylan’s Pristiq ANDA in the US District Court for District of Delaware.

As per IMS Health data, Pristiq generated revenues of approximately $559.4 million for the 12 months ending March 31, 2012.

As of June 28, 2012, Mylan had 169 ANDAs pending FDA clearance, targeting $83.9 billion in branded sales annually. Mylan believes that about 37 of these ANDAs are first-to-file opportunities, representing approximately $25.6 billion in branded sales. The revenue figures are as per IMS Health for the 12 months ending December 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 lackluster performance in the Europe, Middle East and Africa (EMEA) region. Additionally, with most large branded drugs 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.

Thus, we prefer to remain on the sidelines and have a Neutral recommendation on Mylan. The stock carries a Zacks #2 Rank (Buy rating) in the short term.