"It has been estimated that $100 billion of branded drugs will go off patent over the next five years and Mylan (NYSE: MYL) is very well positioned to benefit," says growth stock expert Tom Bishop.
In BI Research, he explains, "Mylan has not yet benefited much yet from the focus on healthcare reform, though generics are clearly part of the solution to lowering the cost of healthcare."
"Mylan is predominantly a generic drug company that, in the wake of its acquisition of Merck Generics, has $5 billion in sales and 120 ANDA's pending FDA approval targeting drugs with branded markets totaling $85 billion to fuel future growth.
"Of these 120 Mylan has thirty-five pending ANDAs that are potential first-to-file opportunities, representing $16.6 billion in annual brand sales.
"Meanwhile Obama's healthcare plans call for expanding healthcare coverage to more Americans and making lower cost generic drugs more available. This incidentally includes developing pathways and rules to bring generics to a spectrum of branded biological drugs.
"Some overseas markets already allow this, but the US is still developing how this will work. In this regard Mylan has recently announced a joint venture with BioCom of India.
"Biocom has all the biologics experience and Mylan brings all the expertise in gaining regulatory approvals and distributing these products around the world. The initial collaboration includes several monoclonal antibody products. So Mylan now has an oar in the water here, though this is several years off.
"Mylan recently received several generic approvals from the FDA. One of these was for Liothyronine Sodium Tablets USP, the generic version of King Pharmaceuticals' thyroid deficiency treatment Cytomel, which has total U.S. sales of approximately $54 million for the same strengths.
"In addition Mylan received approval for its generic version of AstraZeneca's prostate cancer treatment Casodex which has U.S. sales of $322 million for the 50 mg strength approved.
"It also received approval of an additional strength of Mallinckrodt's Restoril with US branded sales of $6 million. Mylan has begun shipping all of these.
"Meanwhile, the company's raised guidance for adjusted EPS remains at $1.00 - $1.10 for 2009 and $1.50 - $1.70 in 2010 when another $140 million of synergies is expected to kick in.
"This coming from Merck's products that will have gone through the reapprovals necessary to be produced in Mylan's facilities by then, saving a lot of redundant costs. We rate the stock a buy."
