The company raised its outlook for fiscal year 2007 amid strong sales of its generic products
Thanks to strong sales of its generic drugs, Mylan Laboratories (MYL) hiked its earnings guidance for the fiscal year ended March 2007. The drug maker continues to fend off competition by selling generic products that patients desperately need.
On Apr. 10, the Pittsburgh company increased its fiscal 2007 earnings per share guidance to a range of $1.60 to $1.63 from the previously announced $1.50 to $1.55. "We continue to experience very strong results from multiple products in our base portfolio," CEO Robert J. Coury said in a press release.
Analysts surveyed by Thomson Financial had predicted the company would earn $1.54 per share during the fiscal year 2007 ended March. Investors bid up the stock 2.8% to $21.78 on the New York Stock Exchange.
Mylan's new guidance excludes the impact of items like stock-based compensation expenses and the company's January 2007 investment in 72% of the voting shares in the Indian drugmaker Matrix for $533 million. That deal gives Mylan about half the world's supply of antiretrovirals used for treating HIV, according to Morningstar.
Meanwhile, Mylan continues to generate steady sales of its generic painkiller fentanyl, in spite of market expectations that competition over that drug would increase. "This is the second time Mylan has increased its 2007 outlook because of generic fentanyl," Morningstar analyst Brian Laegeler said. "While no one can predict the exact quarter generic fentanyl competition will appear, we believe it's only a matter of time. This quarter's cash windfall is insignificant in the larger scheme." He thinks the generic fentanyl market will stabilize and the benefits of the Matrix acquisition will emerge by 2009.
Standard & Poor's Equity Research analyst Robert Gold raised his forecast on Mylan's fiscal 2007 earnings by 10 cents to $1.50. "We think results in FY 08 will benefit from the January 2007 purchase of Matrix Labs, along with contributions from new generic forms of Duragesic, Norvasc, Risperdal and Synthroid, but we remain concerned about competition in other categories," Gold said in a research note. (S&P, like BusinessWeek.com, is owned by The McGraw-Hill Companies.)
One of Mylan's tough rivals is Israel-based Teva Pharmaceutical Industries Ltd. (TEVA), which sells a broad range of generics from antibiotics to analgesics to fertility treatments.