More Generic Launches at Mylan

Mylan Pharmaceuticals Inc., a subsidiary of Mylan Inc. (MYL - Analyst Report), recently announced that it has launched its generic version of Sanofi's (SNY - Analyst Report) Avapro (irbesartan) 75 mg, 150 mg and 300 mg tablets after receiving final approval from the US Food and Drug Administration (FDA).

Avapro is used for hypertension and type II diabetic nephropathy. According to IMS Health, Avapro (75 mg, 150 mg and 300 mg tablets), generated US revenues of approximately $400.7 million for the 12 months ending June 30, 2012.

Meanwhile, Mylan has also launched its generic version of Sanofi’s Avalide (150/12.5mg and 300/12.5 mg), a fixed-dose combination of Avapro and a diuretic (hydrochlorothiazide) for initial use in patients with hypertension, who might need several drugs control their blood pressure. According to IMS Health, Avalide (150/12.5mg and 300/12.5 mg tablets), generated US revenues of approximately $117.4 million for the 12 months ending June 30, 2012.

Apart from Mylan, several other generic manufacturers including Sandoz, the generic division of Novartis (NVS - Snapshot Report) and Dr. Reddy's Laboratories Ltd. (RDY - Snapshot Report) have received approval for their generic versions of Avapro and Avalide. We note that Teva Pharmaceutical Industries Ltd. (TEVA - Analyst Report) was the first to receive approval for Avapro and Avalide in April 2012 and enjoyed a 180-day period of marketing exclusivity.

As of September 28, 2012, Mylan had 168 ANDAs pending FDA clearance, targeting $79 billion in branded sales annually. Mylan believes that about 33 of these pending abbreviated new drug applications (ANDAs) are first-to-file opportunities, representing approximately $20.7 billion in branded sales. The revenue figures are as per IMS Health for the 12 months ending June 30, 2012.

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 run.