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Another Generic Launch at Mylan

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Mylan Inc. (MYL - Free Report) recently announced the launch of its generic version of Valeant Pharmaceuticals International’s (VRX - Free Report) Zovirax ointment. Mylan launched the drug after receiving final approval from the US Food and Drug Administration regarding the Abbreviated New Drug Application (ANDA) for its generic version of the drug.

We note that the branded version of the drug is marketed for the management of initial genital herpes and in limited non-life-threatening mucocutaneous herpes simplex virus infections in immunocompromised patients.

We remind investors that the launch of the product, the first generic version of Zovirax ointment, is the second generic launch at Mylan in the space of a few weeks. Last month, Mylan launched its generic version of Sunovion’s Xopenex inhalation solution. Sunovion is an indirect, wholly-owned subsidiary of Japanese company, Dainippon Sumitomo Pharma Company Limited.

The drug is approved for the treatment or prevention of bronchospasm in adults, adolescents and children (6 years and above), suffering from reversible obstructive airway disease. 

Mylan has a strong generic product portfolio and pipeline. As of Apr 3, 2013 the company’s generic unit had 178 ANDAs pending approval by the US regulatory body. The ANDAs represent annual sales worth $78.4 billion, according to data released by IMS Health.

Mylan believes that 35 of these pending ANDAs are potential first-to-file opportunities. Data released by IMS health further revealed that the 35 ANDAs represent annual branded sales worth $20.3 billion, for the 12 months ending Jun 30, 2012.

We note that Mylan has received quite a few approvals on the generic front over the past few months. Apart from Mylan, Dr. Reddy's Laboratories Ltd. (RDY - Free Report) too has been making multiple generic launches over the past few months.

Our Take

Mylan’s geographic reach and product depth, along with a robust generic pipeline, are contributing to its overall growth. We are also pleased with Mylan’s focus on emerging markets. Over the long term, the biggest opportunities for growth in the generics industry would be expansion in emerging markets.

However, we remain cautious of the company’s lackluster performance in Europe, Middle East and Africa. Additionally, as most of the large branded drugs are 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.

Mylan carries a Zacks Rank #2 (Buy). Akorn, Inc. (AKRX - Free Report) too carries a Zacks Rank #2 in the generic space.

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