Mylan shares slide after warning of hit to revenue

(Reuters) - Generic drugmaker Mylan NV MYL.O said on Tuesday reevaluation of its portfolio of medicines will continue next year and cautioned of a hit to revenue, and its shares nearly 6%.

FILE PHOTO: Logo of Mylan Laboratories, a company primarily engaged in the commercialization of generic drugs is pictured in Merignac near Bordeaux, France, September 19, 2019. REUTERS/Regis Duvignau

Mylan, which posted higher-than-expected third-quarter profit with the help of cost constraints, said it would reassess products it sells outside United States and had nearly completed its review of U.S. products.

The review process should not affect net profit, President Rajiv Malik said on a conference call with analysts. However, “it does have an impact in our top line results.”

Mylan in July agreed to merge with Pfizer Inc's PFE.N Upjohn unit that sells off-patent branded drugs. The company will be able to leverage a strong base in Asia through Upjohn, headquartered in China, a prime market for well-known older brands such as Pfizer's cholesterol drug Lipitor and erectile dysfunction treatment Viagra.

Mylan provided few new details on the merger plan, but said it still expects the deal to close in the middle of next year.

“This merger will solve nothing,” said Cowen and Co analyst Ken Cacciatore, adding that the Pfizer deal will not halt the problem of “constant downward deterioration in the base businesses.”

North America business, which accounts for more than a third of Mylan’s total revenue, has been grappling with intense competition, falling generic drug prices and expenses related to fixing issues at its Morgantown manufacturing plant in West Virginia.

Newer drugs, including Wixela and Yupelri for respiratory ailments, helped North American sales rise 8% to $1.09 billion (£846.93 million), marking the second consecutive quarter of growth after years of decline.

Mylan warned that 2019 sales from Wixela could fall short of its earlier target.

“While our launch of Wixela has been very successful, full year sales are anticipated to be a bit short of original expectations as a result of the aggressive (market) share retention actions,” Chief Financial Officer Kenneth Parks said, without elaborating on whether that referred to offering discounts or rebates.

The company on Tuesday also narrowed its full-year adjusted earnings forecast range to between $4.20 and $4.40 per share, from its prior view of $3.80 to $4.80.

Excluding items, Mylan earned $1.17 per share in the quarter, beating analysts’ estimates by 4 cents, according to IBES data from Refinitiv.

Total revenue increased 3.5% to $2.96 billion, missing analysts’ estimates of $3.01 billion, partly hurt by the stronger dollar’s effect on foreign exchange rates.

Mylan shares were down 5.8% at $18.58.

Reporting by Saumya Sibi Joseph and Aakash Jagadeesh Babu in Bengaluru; Editing by Maju Samuel and Bill Berkrot