Mayne Pharma Trading Update Falls Short
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Generic drug group, Mayne Pharma disappointed investors yesterday with the release of preliminary results for 2016-17 underwhelming investors.and sending the shares down nearly 10% to 81 cents.
The company told the market yesterday net profit for the year to June will be in the range of $92-95 million.That was well below the market estimates of $119 million.
Mayne also said it expects total revenue of around $581 million and underlying earnings before interest, tax, depreciation and amortisation of between $212 million $216 million when it releases its full audited figures on August 25.
Sales of Teva products were down over the second half, reflecting a more competitive generic drug sector pricing environment, the company explained yesterday.
Mayne also flagged a non-cash pre-tax charge of $25 million relating largely to intangible asset impairment and reassessment of the useful life of acquired Teva portfolio assets to 15 years.
“Considering the generic market environment and asset specific factors, the company has reduced the useful life of the Teva related intangible assets from 20 to 15 years commencing 1 January 2017,” the company said.
Mayne Pharma paid almost $1 billion deal to buy a portfolio of products from Teva Pharmaceutical’s generics business. Teva was forced to sell a large range of products to get the regulatory greenlight in the huge US market for its $US40 billion takeover of rival group, Allergan.
But some astute local investors were wondering if Mayne’s results would be worse than expected after Teva reported a sharper than expected slide in quarterly earnings late last week.
Teva, the world’s leading generic drug group, missed estimates for both earnings per share and revenue, and interim CEO Yitzhak Peterburg blamed the poor performance on a saturation of the US generic drug market.
"[Teva] experienced … greater competition as a result of an increase in generic drug approvals by the U.S. FDA,” Mr Peterburg said in the earnings release, adding that “customer consolidation” hurt sales in the U.S., before saying competition hurt new product launches, some of which were delayed in the recent quarter.
Earnings per share of $US1.02 was 4 cents below what analysts surveyed by Reuters expected. Revenue also fell short of analyst forecasts, coming in at $US5.686 billion compared to the expected $US5.718 billion. The company said the rising instability in Venezuela and the currency, the bolivar had a material effect, reducing revenue by $US183 million compared to the same quarter last year.
In its statement yesterday, Mayne said;
“Whilst generic products is facing competitive pricing pressure in the retail channel, the company is focused on a number of initiatives to offset these headwinds, including diversifying its channels to market into government and specialty pharmacy, pursuing new market share opportunities with the retail customer base, extracting $US12 million of annual product cost savings from transferring the Teva products into new manufacturing sites by FY19, new product launches and further business development activity.”
And Mayne said that CEO Scott Richards will relocate to the US. The American market accounts for 94% of the company’s revenue.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.