On the surface,
Mylan 's (Nasdaq: MYL) earnings report wasn't
pretty. Revenue fell by 24%, and the company lost $0.13 per
share. Dig a little deeper, though, and you'll see the
generic-drug maker is far from a copycat of its struggling
branded-drug-making counterparts.
On the revenue side, last year's number included the
saleto
Forest Labs (NYSE: FRX) of some of Mylan's
royalty rights to blood-pressure drug Bystolic. Excluding
that, revenue rose 5.2%, which isn't bad especially when you
consider that Mylan's foreign sales had a serious currency
headwind.
Interestingly, revenue from its branded-drug division,
Dey, rose by 20% year over year. Mylan was going to sell Dey
but
didn't, probably because it couldn't find a buyer willing
to pay enough. Looks like that was a pretty smart move.
The net loss for the quarter was attributable to a $121
million charge to settle a D
epartment of
Justice investigation over calculationsof Medicaid drug
rebates. The previously announced settlement isn't a great
thing, but it's not the only drugmaker to have been stung by
the DOJ, and things could have been a lot worse:
Eli Lilly (NYSE: LLY) recently paid more than
$1.4 billion to settle a lawsuit with the DOJ, and
Pfizer (NYSE: PFE) topped that with a $2.3
billion charge. If you look just at earnings from operations,
Mylan is looking healthy, with a solid 17% increase year over
year.
The benefit from Mylan's larger size after acquiring Merck
KGaA's generic-drug business is starting to show. The company
may be at a slight disadvantage since it isn't as big as
rivals
Teva Pharmaceuticals (Nasdaq: TEVA) and
Novartis (NYSE: NVS), but its smaller size
also gives it a bit more
room to run.
This article was originally published as
It's Not As Frightening As It First Appearson
Fool.com
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