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Generics Launches at Mylan

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Mylan Inc. (MYL) recently announced that it has launched its generic version of Noven Therapeutics’ Lithobid (lithium carbonate) extended release 450 mg tablets after receiving final approval from the US Food and Drug Administration (:FDA). 

Lithobid is approved for manic episodes associated with manic depressive illness. According to IMS Health, lithium carbonate tablets, 450 mg, generated US revenues of approximately $15.2 million for the 12 months ending June 30, 2012.

Earlier this year, Mylan had received FDA approval for its generic version of Lithobid extended-release 300 mg tablets. The drug is approved as a maintenance therapy for bipolar disorder patients in order to reduce the frequency and intensity of manic episodes. Mylan started shipments of the drug for the said indication.

In addition to launching its generic version of Lithobid, Mylan’s generic version of Teva Pharmaceutical’s (TEVA) Provigil (modafinil - 100 mg and 200 mg), was approved by the FDA. Provigil is approved for improving wakefulness in adult patients with excessive sleepiness associated with narcolepsy, obstructive sleep apnea/hyponea syndrome and shift work sleep disorder.

In June this year, Mylan had resolved all disputes with Teva regarding the litigation filed by the former in the District of Columbia federal court against the FDA concerning the company’s ANDA for modafinil tablets. We note that Teva alone was entitled to the180-day exclusivity of generic Provigil as it was the first-to-file.

As per the terms of the agreement with Teva, Mylan was granted permission for the launch of its generic version before the expiration of Teva’s 180-day marketing exclusivity period.

Currently, Par Pharmaceutical Companies Inc. (:PRX) also markets the generic version of Teva’s Provigil in the US.

According to IMS Health data, modafinil tablets 100mg and 200 mg generated US revenues of approximately $1.3 billion for the 12 months ending June 30, 2012.

As of August 10, 2012, Mylan had 166 ANDAs pending FDA clearance, targeting $78.4 billion in branded sales annually. Mylan believes that about 35 of these pending ANDAs are first-to-file opportunities, representing approximately $25.1 billion in branded sales. The revenue figures are as per IMS Health for the 12 months ending December 31, 2011. 

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 term.

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