if you read through this speech and the presentation, there is a lot of spin and polish that they are working hard to put onto these numbers.
gpd is the buggest division by far, and its going backwards more than predicted. the oct/ nov numbers are more positive, but these types of deflationary cycles usually play out over a much longer period than the 6-9mo months were are dealing with thus far in us generics. i think the downswing of that cycle has further to go yet, and teading between the lines i dont see scott or the team really calling the bottom just yet.
i think the statements that it will all cyclically recover is a little premature. im especially concerned re the oral contraceptive market given trumps policy change in hmo's covering ocp. the sales deflation in contrqceptives was sharp, but im not sure if this was policy related or its too early and that effect is yet to trickle thrkugh yet.
sbd continues to go backwards and although scott tries to say half the losses are one offs, im not entirely convinced as its a result of poor demand and short shelf life as generics have entered the doryx market.
the new sales force will drive growth but since they are still in diapers i dont see this as magically increasing profits in h2, because doubling your sales force and training them up is expensive and it will take time to green sales reps to build relationships and influence prescribing. it simply doesnt happen overnight just bexause they knock on a doctors door. i expected more rapid dermatology growth so this is a disappointment that they tried to play down with excuses about loyalty cards and price rises.
the mcs growth is v small in absolute terms and far outweighed by the gpd and sbd decline.
mpi is a future growth driver so i see a fairly negligible contribution or ongoing loss for the time being.
the generics pipeline is a big positive but will take years for multiple products to be reviewed, approved, launched, promoted then grow in revenue to filter through to the bottom line.
the basal cell naevus syndrome data is a little overhyped: 40-50% were progressing after a year or so on the survival chart on the presentation, so i suspect there is not much longevity to the treatment effect/ benefit. furthermore its an extremely rare disease with a smaller addressable market than their inflated numbers in my opinion.
the stock impairment charges and share cancellations further muddy the financial picture but are symptomatic of the problems.
the things i liked were:
1) diversification towards the massive govt dva market from the retail pharmacy market
2) strong pipeline of products
3) diversifying away from generics with api sbd & mcs
4) dofetilide revenue
5) patent infringement case to protect ip
6) oct/ nov trading glimmers of hope
7) long term outlook.
to me its too early to enter myx again as the funds and traders will continue to play here and i think the recovery is further off than many want to believe. i think their will be more positive talk but also more ugly numbers in february. ill be watching other generics compnaies closely looking for signs the industry dynamics are changing.
good luck to all, sorry to be negative but thats my honest read of a heavily spun set of ugly numbers. im not a shorter, but will look to re enter some time in the next 12 months when i think the worst is behind us.
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