Mylan profit misses estimates as EpiPen sales decline
Mylan's third-quarter profit missed analysts' estimates as the drugmaker sold fewer EpiPen emergency allergy shots ahead of a cheaper version of the product that could be launched before next year.
Under pressure from lawmakers who criticized EpiPen's high price of $600 for a two-pack, Mylan announced in August that it would offer a half-price, generic version of the life-saving hand-held auto-injectors. The anticipation of the generic launch resulted in a drop in EpiPen's sales volume in the third quarter, leading to a 4 percent decline in revenue at the specialty-drug division, which sells the shot.
EpiPen has been a major driver of profit at Mylan, generating about 40 percent of its operating profits. The company, which has a legal address in the Netherlands and is run from Canonsburg, Pennsylvania, said Wednesday it expects to launch the product in the first half of December, and more than 80 percent of patients using EpiPen are projected to switch to it.
Earnings excluding some items totaled $1.38 a share, the company said in a statement, compared to the $1.45 average of predictions compiled by Bloomberg.
Sales at Mylan's generics unit, its biggest business, jumped 17 percent to $2.61 billion, boosted by the acquisition of Swedish pharmaceutical company Meda AB. The deal expanded Mylan's market reach and brought in a cache of prescription and over-the-counter drugs. The company told analysts that integrating Meda's business continues.
Chief Commercial Officer Anthony Mauro said on a conference call that generic price declines in the third quarter compared to a year earlier were in the mid-single digits and expected to continue through the end of the year. He said the generic industry is based on "vigorous competition," and Mylan often experiences "a net deflationary price environment."
"Our business model has never been premised on price increases for our growth, and this remains the case today," Mauro said on the call.
The EpiPen generic could help Mylan maintain some of the market share it would have lost with the introduction of a rival generic. Competitors have failed to receive U.S. Food and Drug Administration approval for their own treatments, but EpiPen's position will be challenged next year when a recalled product, Auvi-Q from closely held Kaleo Inc., will resume sales. Kaleo's product was recalled over potential malfunctions that could give patients the wrong dose of drug. It hasn't settled on a price.
EpiPen pricing first drew attention from Congress in August, and lawmakers asked about Medicaid payments the following month, when Chief Executive Officer Heather Bresch testified Sept. 21 before a House committee.
Bresch told analysts on Wednesday that the company wished it had anticipated how some patients would be paying full list price for EpiPen. She said the health care system "was not built for consumerism" and "needs to be completely reinvented." She also said the company has applied to extend EpiPen's expiration date.
"I would like to re-emphasize that Mylan is much more than any one product and our reach goes far beyond any one market," she said.
Mylan posted a third-quarter net loss of $119.8 million, or 23 cents a share, compared with net income of $428.6 million, or 83 cents, a year earlier, primarily as a result of a $465 million settlement with the U.S. Justice Department over Medicaid rebates for EpiPen announced last month. In addition, the company still faces investigations by the West Virginia attorney general and the U.S. Securities and Exchange Commission.
Congress continues to criticize the EpiPen-related settlement. Medicaid, which provides health insurance to the poor, gets a 23 percent discount on brand-name drugs and a 13 percent discount on generics. EpiPen had been classified incorrectly as a generic since at least 1997, both by Mylan and previous makers of the life-saving medicine, according to the Centers for Medicare and Medicaid Service.
Bresch said the company remains interested in "bolt-on" deals, which she said wouldn't be major acquisitions such as Meda.
Published: Nov 10, 2016