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Mylan Down 24% Year to Date: What's Troubling the Stock?

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Shares of Mylan N.V. (MYL - Free Report) have declined 24.7% in the last six months compared to the industry’s loss of 20.0%. Here we analyze the factors that led to the underperformance.

 

Mylan is a global pharmaceutical company with a well-established generics business as well as a presence i specialty pharmaceuticals.

However, the company continues to face challenges due to volatility and uncertainty in the world's largest pharmaceutical market — the United States due to pressure from both accelerated new approvals on the company’s existing generic products and continued consolidation of the customer base. Contributions from new product launches in the United States were one of the lowest in the second quarter.

Sales from EpiPen continue to decline due to increased competition and the impact of the launch of the authorized generic. Recently, Meridian Medical Technologies, a Pfizer, Inc. (PFE - Free Report) company which manufactures EpiPen Auto-Injector, the EpiPen Jr Auto-Injector and the authorized generic for both the EpiPen Auto-Injector and the EpiPen Jr Auto-Injector received a warning letter from the FDA.

Mylan is also exploring the world of biosimilars, a market that has the potential to grow to $20 billion in 2020. A partnership with Biocon, and collaborations with Momenta and Mabion have helped Mylan to develop a wide portfolio of biosimilar/insulin analog generic products, representing a total brand market value of more than $75 billion in worldwide sales. The Biocon partnership includes six biosimilar versions of Herceptin, Neulasta, Humira, Avastin, Enbrel and Neupogen and three insulin analogs (Lantus, Humalog and NovoLog).

However, the FDA recently notified Mylan and partner Biocon that the target action date for a biosimilar version of Roche Holdings’ (RHHBY - Free Report) Herceptin (trastuzumab) has been extended to Dec 3, 2017. A decision from the FDA was expected by Sep 3 but the FDA extended the period due to review of some of the clarificatory information submitted to the agency as part of the application review process.

Meanwhile, the company’s efforts to get Advair’s generic approved suffered a blow when the FDA issued a complete response letter (CRL) to its ANDA for generic Advair Diskus. Advair recorded sales of £1.8 billion in 2016 thereby representing great potential. Although the company did not mention the contents of the CRL such setbacks are likely to weigh on the company’s shares. Moreover, the FDA recently accepted Novartis AG’s (NVS - Free Report) Sandoz’s ANDA for Advair. A potential approval will give Sandoz the edge over Mylan.

Moreover, the company believes approval delays will persist in 2017 thereby impacting business further.  The company believes that increased competition resulting from the FDA's focus on accelerating the approvals of third, fourth, or fifth generics will impact sales.

Hence, we expect the company to face challenging conditions ahead.

Zacks Rank

Mylan currently carries a Zacks Rank #5 (Strong Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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