Mylan Pharmaceuticals Inc., a subsidiary of Mylan Inc. ( MYL - Analyst Report ) , recently announced that it has launched its generic versions of Takeda Pharmaceutical Co. Ltd.’s ( TKPYY ) diabetes drugs, Actos (pioglitazone) and Actoplus Met (pioglitazone and metformin).

The US Food and Drug Administration granted final approval to Mylan’s generic version of Actos, 15 mg, 30 mg and 45 mg and Actoplus Met, 15 mg/500 mg and 15 mg/850 mg. Mylan will enjoy a 180-day period of marketing exclusivity on both the products. According to IMS Health, Actos and Actoplus Met generated US revenues of approximately $2.7 billion and $413 million for the 12 months ending June 30, 2012.

Meanwhile, Teva Pharmaceutical Industries Ltd. ( TEVA - Analyst Report ) gained approval for authorized generic versions of Actos, 15 mg, 30 mg and 45 mg and Actoplus Met 15 mg/500 mg and 15 mg/850 mg.

We note that Watson Pharmaceuticals Inc. ( ) was also seeking to get its generic version of Actos, 15 mg, 30 mg and 45 mg, approved and gain 180 days of marketing exclusivity. However, the FDA did not approve Watson's Abbreviated New Drug Application (ANDA), which can now get delayed by up to six months. Watson has filed a lawsuit against the FDA challenging the regulatory body’s decision.

As of August 17, 2012, Mylan had 166 ANDAs pending FDA clearance, targeting $75.6 billion in branded sales annually. Mylan believes that about 34 of these pending ANDAs are first-to-file opportunities, representing approximately $21.7 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 remain 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.