Mayne pharma company shares plunge on revised sales

Mayne Pharma buried its bad news a long way back in its presentation to investors on Monday, but when shareholders caught on their reaction was sharp.

Mayne Pharma’s shares plunged more than 10 per cent after it revealed sales for a flagship suite of US generic drugs would not meet guidance.

The news was buried on on page 107 of a 110-page update released to coincide with an investor day the company was holding on Monday.

The company said in the investor update that tougher generic drug pricing was behind the revised guidance for the suite of drugs called the Teva portfolio.

“The US generics market is facing a tough price deflation cycle, there’s no doubt about that, and Mayne Pharma is not immune,” chief executive Scott Richards told investors.

“This is probably as tough as it’s been.”

Mayne bought the portfolio of drugs from pharmaceutical giant Teva Pharmaceuticals last year for $845 million. The aquisition saw Mayne’s first-half profit soar 278 per cent to $72.7 million in February.

Shares were trading at $1.20 on Monday afternoon and was down almost 11 per cent for the day wiping about $200 million off the market capitalisation of the company.

Shares closed at $1.20.

Mayne, which is worth more than $1.8 billion, re-affirmed its full-year profit guidance during its first half results in February.

Chief executive Scott Richards said at the time that the outlook for the group “continues to be positive” with significant growth opportunities from recent acquisitions and new product launches.

He said the generic product division would benefit in the second half from a full six months’ contribution from the Teva product acquisition.

But on Monday Mayne raised several threats to its pharma pricing including the fact that US President Donald Trump had accused the industry of “getting away with murder”.

The company has been under fire on multiple fronts in the US. Its shares dived in December on the back of news of a US price fixing lawsuit.

The civil complaint – originally filed by 20 US states, now 40 – accuses six companies including Teva and Mayne of conspiring to artificially inflate prices on an antibiotic and a diabetes drug.

It is also facing three civil class actions over the matter.

Mr Richards said on Monday the lawsuits would not have a material impact on the business.

“We still don’t believe that under any reasonable case we can see based on our knowledge that it’s going to be a material event in any fiscal year,” Mr Richards said.

A spokesperson for the company said nothing material had changed in terms of its full year earnings guidance for Teva.

“Teva sales are expected to be down due to increasing price deflation in the US generics market,” the spokesperson said.

“However, notwithstanding that, the FY17 Teva earnings before interest, tax, depreciation and amortization (EBITDA) is broadly in line with the guidance we gave at the time of the Teva acquisition.”

Henry Sapiecha


Tags: , ,

Leave a Reply