Drugmaker Mylan Laboratories said it lost $71.3 million ($0.31/share) in FQ4, vs. a $57.7 million profit a year ago, but that its adjusted profit of $0.47/share (ex-acquisition costs) beat its previous forecast. Analysts were calling for a higher $0.55/share, but the company said analyst estimates included revenue from Mylan's generic copy of Pfizer's Norvasc hypertension drug. The drug, known as amlodipine, was launched on March 23, but Mylan deferred revenue recognition because of accounting rules; it said revenue from the drug would have been up to $90 million in Q4. Total revenue was up 53% to $484 million, bolstered by generic versions of J&J's Duragesic pain patch and Ditropan XL bladder treatment. On May 12, Mylan announced it would buy German drugmaker Merck KGaA's generics unit for $6.7 billion (more than its own market cap), making it the #3 global generic drugmaker. Analysts have cautioned that the deal, to be completed in the second half of 2007, may be too big for Mylan to handle: The merger will double Mylan's staff and more than triple its product portfolio. Mylan will need to raise about $5-$5.5B, of which Merck supports about $2-$2.5B, suggesting it will need to undertake a large scale equity issuance. In a May 14 note, CIBC said: "Prior to Merck, MYL shares had seemed to have finally found their mojo, riding on the back of strong new product momentum that had diminished generic Duragesic EPS risk. This deal will have more than its fair share of doubters as financing risk appears to dwarf usual stuff like integration." Shares are down 7.4% to $18.75 in pre-market trading.
Sources: Press release, Reuters, Bloomberg
Commentary: Mylan Labs Acquiring Merck KGaA's Generics Unit for $6.7 Billion • Mylan Can Breathe Easy on Norvasc • Pfizer's Petition for Rehearing in Norvasc Case Denied
Stocks/ETFs to watch: Mylan Laboratories Inc. (NASDAQ:MYL). Competitors: Teva Pharmaceutical Industries (NYSE:TEVA), Barr Pharmaceuticals Inc. (BRL), Watson Pharmaceuticals Inc. (WPI), Pharmaceutical Resources Inc. (NYSE:PRX). ETFs: HealthShares Cardiology (HRD), SPDR Pharmaceuticals (NYSEARCA:XPH), HOLDRS Pharmaceutical (NYSEARCA:PPH)
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