How Did A Maligned Mylan Surprise To The Upside With 2017 Outlook?

“While new approvals hurt Mylan N.V. (NASDAQ: MYL) on price (during Q3), the company has defended share effectively; a point management highlighted but we believe has been underappreciated,” Barclays’ Douglas D. Tsao said in a note.

The analyst maintains an Equal-Weight rating on the company, while raising the price target to $47.

Q3 Trends

Although Mylan viewed the Q3 trends as a result of diversification, Tsao believes the bear case laid too much emphasis on the Q3 trends, which were hurt by declines witnessed by several of the company’s products, including generic esomeprazole and levothyroxine.

These products seemed to stabilize by year-end 2016, providing the company a more solid footing entering 2017.

However, the analyst noted that the “dynamics of the U.S. market seem somewhat tenuous for now, represents 2/3 of profitability even with diminished reliance on the EpiPen.”

Beat Guidance

In addition, the analyst expressed optimism following the 2017 guidance, which was ahead of expectations, while also emphasizing the growth opportunities for the company.

Tsao believes there could be opportunity in the “pharmerging markets” for Mylan, as well as in the EMEA, although the EMEA has entailed various challenges for the company over the years, with the recent gains in the region potentially attributable to the EPD acquisition.

“The market has been focused on generic Advair with an upcoming action fate of March 28,” Tsao pointed out, while adding that the company had expressed confidence in receiving approval, with a mid-year launch.

Opportunities

However, Mylan did not provide any details of pipeline opportunities for its U.S. generics, apart from those for Advair and biosimilars.

The analyst stated that the company has FDA action dates for biosimilars to Neulasta and Herceptin in 2017.

“We see good probability for pegfilgrastim approval, though far from certain, which would put them second to market… in a very attractive biosimilar market,” Tsao added.

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