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Is Mylan (MYL) Doomed to Witness a Terrible 2020 Too?

Zacks Equity Research

The year 2019 has not been a smooth one for Mylan N. V. MYL due to challenging business conditions in North America and pricing pressure. Year to date, shares of this Zacks Rank #3 (Hold) company have lost 28.6% against the industry’s growth of 8.3%. Let us look at some of the challenges, which plagued the company this year, and whether or not it holds any promise going into the next.

 

A Close Introspection

Generic maker Mylan has not seen the best of 2019 for a few reasons. The company’s North America segment witnessed lower sales of existing products due to changes in the competitive environment, including the loss of exclusivity on tadalafil.

It also faced legal issues. The U.S. Securities and Exchange Commission (SEC) announced charges against the company in connection with its EpiPen product probe. The SEC charged Mylan for accounting and disclosure failures relating to a Department of Justice (DOJ) probe into whether the company overcharged Medicaid by hundreds of millions of dollars for its largest product, EpiPen. The SEC stated that investors were kept in the dark about EpiPen misclassification and the potential loss the company faced as a result of the pending investigation into the misclassification. Consequently, Mylan has agreed to pay $30 million as charges for the same. Moreover, the complaint alleges that Mylan produced documents and other information to DOJ, including potential damage calculations and offers for settlement. The allegations of misclassification and resultant charges further added to Mylan’s woes. 

Moreover, rival Teva Pharmaceutical TEVA has already won FDA approval for the first generic version of Mylan’s EpiPen and EpiPen Jr, which, in turn, will unfavorably impact sales further.

Earlier, there were allegations against Mylan and Teva for inflating the prices of generic drugs. Both companies were also accused of obstructing a probe on the same by a few lawmakers.

Can the Stock Stage a Comeback in 2020?

In July, Mylan announced a merger agreement with Upjohn, Pfizer's PFE off-patent branded and generic established medicines business (includes Lipitor, Celebrex and Viagra), to create a new global pharmaceutical company.  Per the agreement, which is structured as an all-stock, Reverse Morris Trust transaction, each Mylan share would be converted into one share of the new company. Mylan had previously undertaken a strategic review of its business due to challenging business conditions in North America and pricing pressure. The decision to merge with Upjohn comes as a result of this review.

Pfizer’s shareholders would own 57% of the combined entity, while Mylan’s shareholders would own the remaining 43%. The transaction has been unanimously approved by the boards of both companies.

The new company will be named Viatris upon the closing of the merger, which is expected in mid-2020. Viatris will boast a diverse portfolio across many geographies and focus on key therapeutic areas.

This merger looks encouraging for the company. The transaction will allow the new company to meaningfully expand the geographic reach of Mylan’s existing broad product portfolio and future pipeline — including significant investments in complex generics and biosimilars — into new growth markets where Upjohn has existing sales infrastructure and local market expertise.

Thus, with this merger, Mylan could see a brighter 2020.

The company also launched a few key products in 2019.

Mylan and partner Biocon Ltd. launched Ogivri (trastuzumab-dkst), a biosimilar to Roche Holding AG’s RHHBY blockbuster breast cancer drug Herceptin, in the United States.

These new launches along with the company’s key products, including Yupelri, Copaxone, Fulphila and Wixela Inhub, are likely to help revive  growth,

Mylan is a Zacks Rank #3 (Hold) stock, currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Mylan N.V. Price

 

Mylan N.V. Price

Mylan N.V. price | Mylan N.V. Quote

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Roche Holding AG (RHHBY) : Free Stock Analysis Report
 
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