A move into Japan isn't a bad idea, but it isn't going to save the company either.

Branded-drug makers aren't playing fair.

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Recently, Mylan Inc.‘s (MYL) subsidiary, Matrix Laboratories received final approval from the US Food and Drug Administration (FDA) for its Abbreviated New Drug Application (ANDA) for Lansoprazole Delayed-release (DR) capsules in two dosage forms (15 mg and 30 mg). Mylan plans to begin shipment of the product immediately. The drug is the generic version of Takeda [...]

(MYL) Mylan Wins FDA Approval for Their Abbreviated New Drug Application

Recently, Mylan Inc.‘s (MYL) subsidiary, Matrix Laboratories received final approval from the US Food and Drug Administration (FDA) for its Abbreviated New Drug Application (ANDA) for Lansoprazole Delayed-release (DR) capsules in two dosage forms (15 mg and 30 mg). Mylan plans to begin shipment of the product immediately. 

The drug is the generic version of Takeda Pharmaceuticals' (TKPHY.PK) proton pump inhibitor Prevacid DR Capsules. According to IMS Health (RX), the branded version had US sales of approximately $3 billion for the 12 months ending June 30. 

Mylan received quite a few approvals in the recent past. In October, Mylan settled its dispute with Pfizer (PFE) related to the patent of antifungal drug Vfend (voriconazole), following which Mylan received the approval to launch the generic version of the drug. Additionally, in September, Mylan received FDA approval for its generic version of Bristol-Myers Squibb's (BMY) Sinemet for the treatment of Parkinson’s. 

Mylan received a significant approval in the field of HIV treatment with Matrix receiving tentative FDA approval under the President's Emergency Plan for AIDS Relief (PEPFAR) for its New Drug Application (NDA) for a fixed-dose combination of Efavirenz, Lamivudine and Tenofovir Disoproxil Fumarate tablets. Although Matrix will not be able to market the product in the US due to existing patents, the drug can be sold in many developing countries. 

Currently, Mylan has 125 ANDAs pending FDA approval representing $84.1 billion in annual brand sales, according to IMS Health. Among these, 37 are potential first-to-file opportunities, representing $19.2 billion in annual brand sales. 

We expect the Merck Generics acquisition to contribute significantly to Mylan’s long-term growth and help expand its footprint in non-US markets. Based on the strong third quarter earnings, Mylan raised its 2009 earnings guidance. The company now expects its earnings per share in the range of $1.24 - $1.28, up from the earlier guidance of $1.13 - $1.20. We have a Neutral recommendation on the stock.
Read the full analyst report on "MYL"
Read the full analyst report on "PFE"
Read the full analyst report on "BMY"
Read the full analyst report on "RX"
Zacks Investment Research

Here’s another terrific post by Pharmboy, this time discussing Generic Drug Makers. - Ilene

Generic Drug Makers

Courtesy of Pharmboy

Coming to the end of a good year, and good riddance for some!  Whilst the market has been irrational for some time, it is not about what we think but rather about what others that have money think.  I have my notions, and here are a few companies that may do well in the New Year with a passed health care reform bill.

I really like the generic market right now. With patents expiring you can literally gauge how much a generic will make based on the patents expiring in the next few months. These generics are the vultures that follow the in a pack of lions.  They have a good way of scavenging for their food and vultures have a distinct relationship with the lions.  They may not come up with the drugs but they are definitely going to make a nice margin from them.  But the competition is fierce these days, and competitors in the generic market include Watson (WPI), Teva (TEVA) , Dr Reddy’s Labs (RDY), Hi-Tech Pharmacal (HITK), Par Pharmaceuticals (PRX), and Caraco (CPD).

First up, Mylan Pharmaceuticals (MYL) - I know that Phil has liked Teva in the past and I have noted Mylan (#3 in generics), WPI and RDY (pre-GSK rumors).  Currently, Mylan has blown through its 52 week high so is it still a buy?  In short answer, yes.  Mylan’s future comes from a swath of FDA approvals that have come in over the past few months.

1. August 27, 2009 Mylan Begins Marketing First Generic Version of BenzaClin(R) Acne Treatment
2. August 18, 2009 Mylan’s Matrix Receives First and Only Tentative FDA Approval Under PEPFAR for Generic Version of Atripla(R) HIV Treatment
3. August 10, 2009 Mylan Receives FDA Approval for Generic Version of Migraine Treatment Imitrex(R)
4. July 20, 2009 Mylan Receives FDA Approval for Additional Strengths of the Antipsychotic Haloperidol— Key News from the article. Currently, Mylan has 119 ANDAs pending FDA approval representing $84.7 billion in annual brand sales, according to IMS Health. Thirty-five of these pending ANDAs are potential first-to-file opportunities, representing $16.6 billion in annual brand sales, according to IMS Health.
5. July 16, 2009 Mylan Receives FDA Approval for Generic Version of Thyroid Deficiency Treatment Cytomel
6. July 7, 2009 Mylan Receives FDA Approval for Generic Version of Prostate Cancer Treatment Casodex
7. June 17, 2009 Mylan Receives FDA Approval for Additional Strength of Generic…
   

The pharmaceutical industry has witnessed major changes in 2009. Performance has been affected by factors like sluggish prescription trends, intensifying generic competition and limited phase III catalysts. The next five years are expected to reflect a significant imbalance between new product introductions and patent losses.

According to IMS Health (RX), this is the main reason why global pharmaceutical market growth will be restricted to the mid-single digits through 2013. Over the next five years, products that currently generate about $137 billion in sales are expected to face generic competition, including Lipitor, Plavix and Seretide. At the same time, new products are not expected to generate the same level of sales as the products losing patent protection have.

With most of the big pharma companies already facing patent challenges for their blockbuster products or likely to face them going forward, the companies have been looking toward mergers and acquisitions (M&A) and in-licensing deals to make up for the loss of revenues.

We saw huge M&A activity in the first half of 2009. Major deals include Abbott Laboratories’ (ABT) acquisition of Advanced Medical Optics, Johnson & Johnson’s (JNJ) acquisition of Mentor Corp., Pfizer’s (PFE) acquisition of Wyeth and the merger between Merck (MRK) and Schering-Plough (SGP).

While these deals took place between large-cap pharma companies, others have been looking toward biotech companies to build their product portfolios. Prime examples include Johnson & Johnson’s acquisition of Cougar Biotechnology, Roche’s acquisition of Genentech, Bristol-Myer Squibbs’ (BMY) acquisition of Medarex, and Sanofi-Aventis’ (SNY) acquisition of Fovea Pharmaceuticals, SA.

We expect this trend to continue. Small biotech companies are also game for such deals. Given the current economic situation, most small biotech companies are finding it difficult to raise cash, thereby making it difficult for them to survive and continue with the development of promising pipeline candidates. As such, it makes sense for these companies to seek deals with pharma companies that are sitting on huge piles of cash. We would recommend investors to put their money in biotech stocks that have attractive pipeline candidates or technology that can be used for the development of novel therapeutics.

Another recent trend seen in the pharmaceutical sector is a focus on emerging markets. Companies like Mylan Inc (MYL), GlaxoSmithKline (GSK) and Sanofi-Aventis are all looking to expand their presence in India, China, Brazil and other emerging markets.

Until recently, most of the commercialization efforts were focused on the U.S. (the largest pharmaceutical market), Europe and Japan. However, emerging markets are slowly and steadily gaining more importance and several companies are now shifting their focus to these areas. According to IMS Health, China’s pharmaceutical market is expected to continue to grow more than 20% annually, and contribute 21% of overall global growth through 2013. Growth in emerging markets could help stabilize the base business during the industry’s 2010-15 patent cliff.

In addition to patent challenges, pharma companies have been facing headwinds in the form of foreign exchange fluctuations. Increased generic competition and foreign exchange headwinds will continue impacting revenues of major pharmaceutical companies. Johnson & Johnson recently reported that third quarter revenues were down due to the impact of generics and foreign exchange headwinds. With revenue growth stalling or slowing down, companies have been resorting to cost-cutting and share buybacks to drive bottom-line growth.

Valuations, however, are attractive, with several of the largest players trading at PEs below 10x, including: Pfizer (8.3x), Eli Lilly (LLY) (7.7x), Sanofi-Aventis ( 7.7x), and AstraZeneca (AZN) (7.2x) based on fiscal 2009 estimates. Attractive valuations, along with big dividend yields and diversified revenues bases, should protect investors from significant downside risk even if the economy continues to languish in the coming quarters.

OPPORTUNITIES

In the pharma space, we are positive on stocks like Alcon (ACL) and Novartis (NVS). We believe these companies will continue witnessing revenue growth based on continued international penetration, new product launches and market share expansion. Pipeline expansion through in-licensing deals and acquisitions should also add to growth.

Novartis should see strong vaccine sales this flu season. The company has received approval from the U.S. Food and Drug Administration for its swine flu vaccine, which should drive revenues.

Although we have Neutral ratings on names like Johnson & Johnson and Abbott Labs, we maintain a positive outlook on these stocks given their diversified revenue base, strong business segments, contributions from recent acquisitions and impressive late-stage pipelines. We also have a positive outlook on Bristol-Myers, which has a strong presence in attractive areas like biologics, cancer and cardiovascular drugs.

In the biotech space, we are positive on names like Gilead Sciences (GILD) and Biogen Idec (BIIB) even though we have Neutral recommendations on these stocks. Gilead’s HIV franchise has been helping the company post better-than-expected earnings over the past few quarters and we expect this trend to continue.

Biotech companies that could be acquisition targets provide opportunities for significant returns. Here, we would like to mention two companies that could be potential take-out targets -- Biogen Idec and Acorda Therapeutics (ACOR). In addition to holding a leading position in the multiple sclerosis market, we believe Biogen has the best pipeline in all of biotech and could be an attractive takeover candidate for pharma companies interested in biologics.

Meanwhile, Acorda is one of the more interesting biotechnology companies under our coverage. We have an Outperform rating on the stock. Acorda recently received a favorable recommendation from an FDA advisory panel on its key pipeline drug, Fampridine-SR, which could have blockbuster potential worldwide.

WEAKNESSES

We recommend avoiding names that offer little growth or opportunity for a take-out. These include companies which are developing drugs that are likely to face regulatory hurdles. The FDA has been exercising more caution before granting approval to new products and several candidates have been facing delays in receiving final approval.

We would also avoid companies like Eli Lilly & Co. (LLY) which are facing patent expirations on key products and do not have a solid pipeline to make up for the loss of revenues that will take place once generics enter the market.

Meanwhile, we continue to believe Pfizer’s (PFE) acquisition of Wyeth (WYE) will create an even bigger struggling company. Both companies have significant patent expirations in the years to come, and both have been severely lacking in their R&D productivity over the past few years. We recommend avoiding both names.

In the biotech sector, we have an Underperform rating on Genzyme Corporation (GENZ), which is facing issues like lower revenues, contracting gross margins, supply constraints, manufacturing hiccups and delays in new product launches.

We would also recommend avoiding biotech companies that are struggling to survive and are unable to strike partnership deals for their pipeline candidates. One name that comes to mind is MannKind Corp. (MNKD) which has been looking for a partner for its key candidate, Afresa. The company’s stock declined significantly on the news that it will not be able to enter into a partnership deal by year end, contrary to earlier expectations.

Another name to avoid would be Alkermes, Inc. (ALKS) which is awaiting FDA approval for its type-II diabetes candidate, exenatide once-weekly. Although the efficacy data on exenatide once-weekly is impressive, we are concerned that the approval of the product could be pushed back beyond the first quarter of 2010, given the current regulatory environment and concerns regarding the safety of the candidate.Zacks Investment Research

The pharmaceutical industry has witnessed major changes in 2009. Performance has been affected by factors like sluggish prescription trends, intensifying generic competition and limited phase III catalysts. The next five years are expected to reflect a significant imbalance between new product introductions and patent losses.

According to IMS Health (RX), this is the main reason why global pharmaceutical market growth will be restricted to the mid-single digits through 2013. Over the next five years, products that currently generate about $137 billion in sales are expected to face generic competition, including Lipitor, Plavix and Seretide. At the same time, new products are not expected to generate the same level of sales as the products losing patent protection have.

With most of the big pharma companies already facing patent challenges for their blockbuster products or likely to face them going forward, the companies have been looking toward mergers and acquisitions (M&A) and in-licensing deals to make up for the loss of revenues.

We saw huge M&A activity in the first half of 2009. Major deals include Abbott Laboratories’ (ABT) acquisition of Advanced Medical Optics, Johnson & Johnson’s (JNJ) acquisition of Mentor Corp., Pfizer’s (PFE) acquisition of Wyeth and the merger between Merck (MRK) and Schering-Plough (SGP).

While these deals took place between large-cap pharma companies, others have been looking toward biotech companies to build their product portfolios. Prime examples include Johnson & Johnson’s acquisition of Cougar Biotechnology, Roche’s acquisition of Genentech, Bristol-Myer Squibbs’ (BMY) acquisition of Medarex, and Sanofi-Aventis’ (SNY) acquisition of Fovea Pharmaceuticals, SA.

We expect this trend to continue. Small biotech companies are also game for such deals. Given the current economic situation, most small biotech companies are finding it difficult to raise cash, thereby making it difficult for them to survive and continue with the development of promising pipeline candidates. As such, it makes sense for these companies to seek deals with pharma companies that are sitting on huge piles of cash. We would recommend investors to put their money in biotech stocks that have attractive pipeline candidates or technology that can be used for the development of novel therapeutics.

Another recent trend seen in the pharmaceutical sector is a focus on emerging markets. Companies like Mylan Inc (MYL), GlaxoSmithKline (GSK) and Sanofi-Aventis are all looking to expand their presence in India, China, Brazil and other emerging markets.

Until recently, most of the commercialization efforts were focused on the U.S. (the largest pharmaceutical market), Europe and Japan. However, emerging markets are slowly and steadily gaining more importance and several companies are now shifting their focus to these areas. According to IMS Health, China’s pharmaceutical market is expected to continue to grow more than 20% annually, and contribute 21% of overall global growth through 2013. Growth in emerging markets could help stabilize the base business during the industry’s 2010-15 patent cliff.

In addition to patent challenges, pharma companies have been facing headwinds in the form of foreign exchange fluctuations. Increased generic competition and foreign exchange headwinds will continue impacting revenues of major pharmaceutical companies. Johnson & Johnson recently reported that third quarter revenues were down due to the impact of generics and foreign exchange headwinds. With revenue growth stalling or slowing down, companies have been resorting to cost-cutting and share buybacks to drive bottom-line growth.

Valuations, however, are attractive, with several of the largest players trading at PEs below 10x, including: Pfizer (8.3x), Eli Lilly (LLY) (7.7x), Sanofi-Aventis ( 7.7x), and AstraZeneca (AZN) (7.2x) based on fiscal 2009 estimates. Attractive valuations, along with big dividend yields and diversified revenues bases, should protect investors from significant downside risk even if the economy continues to languish in the coming quarters.

OPPORTUNITIES

In the pharma space, we are positive on stocks like Alcon (ACL) and Novartis (NVS). We believe these companies will continue witnessing revenue growth based on continued international penetration, new product launches and market share expansion. Pipeline expansion through in-licensing deals and acquisitions should also add to growth.

Novartis should see strong vaccine sales this flu season. The company has received approval from the U.S. Food and Drug Administration for its swine flu vaccine, which should drive revenues.

Although we have Neutral ratings on names like Johnson & Johnson and Abbott Labs, we maintain a positive outlook on these stocks given their diversified revenue base, strong business segments, contributions from recent acquisitions and impressive late-stage pipelines. We also have a positive outlook on Bristol-Myers, which has a strong presence in attractive areas like biologics, cancer and cardiovascular drugs.

In the biotech space, we are positive on names like Gilead Sciences (GILD) and Biogen Idec (BIIB) even though we have Neutral recommendations on these stocks. Gilead’s HIV franchise has been helping the company post better-than-expected earnings over the past few quarters and we expect this trend to continue.

Biotech companies that could be acquisition targets provide opportunities for significant returns. Here, we would like to mention two companies that could be potential take-out targets -- Biogen Idec and Acorda Therapeutics (ACOR). In addition to holding a leading position in the multiple sclerosis market, we believe Biogen has the best pipeline in all of biotech and could be an attractive takeover candidate for pharma companies interested in biologics.

Meanwhile, Acorda is one of the more interesting biotechnology companies under our coverage. We have an Outperform rating on the stock. Acorda recently received a favorable recommendation from an FDA advisory panel on its key pipeline drug, Fampridine-SR, which could have blockbuster potential worldwide.

WEAKNESSES

We recommend avoiding names that offer little growth or opportunity for a take-out. These include companies which are developing drugs that are likely to face regulatory hurdles. The FDA has been exercising more caution before granting approval to new products and several candidates have been facing delays in receiving final approval.

We would also avoid companies like Eli Lilly & Co. (LLY) which are facing patent expirations on key products and do not have a solid pipeline to make up for the loss of revenues that will take place once generics enter the market.

Meanwhile, we continue to believe Pfizer’s (PFE) acquisition of Wyeth (WYE) will create an even bigger struggling company. Both companies have significant patent expirations in the years to come, and both have been severely lacking in their R&D productivity over the past few years. We recommend avoiding both names.

In the biotech sector, we have an Underperform rating on Genzyme Corporation (GENZ), which is facing issues like lower revenues, contracting gross margins, supply constraints, manufacturing hiccups and delays in new product launches.

We would also recommend avoiding biotech companies that are struggling to survive and are unable to strike partnership deals for their pipeline candidates. One name that comes to mind is MannKind Corp. (MNKD) which has been looking for a partner for its key candidate, Afresa. The company’s stock declined significantly on the news that it will not be able to enter into a partnership deal by year end, contrary to earlier expectations.

Another name to avoid would be Alkermes, Inc. (ALKS) which is awaiting FDA approval for its type-II diabetes candidate, exenatide once-weekly. Although the efficacy data on exenatide once-weekly is impressive, we are concerned that the approval of the product could be pushed back beyond the first quarter of 2010, given the current regulatory environment and concerns regarding the safety of the candidate.Zacks Investment Research

Tom Dorsey and Tammy DeRosier - Perspective

Two Veteran Wall Street Analysts Review the July 18, 2008 Edition of the Value Line Investment Survey

Tom Dorsey and Tammy DeRosier - Black Gold

Tom Dorsey and Tammy DeRosier - What a Start to 2008

Joseph Hargett takes a look at news on the Street before the market opens.