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Mylan Inc. (MYL - Analyst Report) recently announced that it has entered into a settlement agreement with Pfizer Inc. (PFE - Analyst Report), Pharmacia & Upjohn Company LLC and Pfizer Health AB. The patent litigation was related to Mylan’s generic version of Pfizer’s Detrol LA (tolterodine tartrate ER, 2 mg and 4 mg) for overactive bladder with symptoms of urge urinary incontinence, urgency and frequency.

Under the terms of the settlement agreement, subject to regulatory approval, Mylan can launch its generic version of Pfizer’s Detrol LA between January 1, 2014 and March 1, 2014. Other terms of the deal were not disclosed.

According to IMS Health, Detrol LA, 2 mg and 4 mg, generated US revenues of approximately $599 million for the 12 months ending June 30, 2012.

This news comes on the heels of the Mylan-Pfizer collaboration to develop, manufacture, distribute and commercialize generic drugs in Japan, announced last month.

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 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. We currently have a Neutral recommendation on Pfizer, which carries a Zacks #3 Rank (short-term ‘Hold’ rating).
 

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