i did a little googling on US generics to get some updated insights in the leadup to the august myx report.
first i did a basic search of US generics pricing 2018 and oulled up a few articles like these:
https://www.drugchannels.net/2018/02/meet-power-buyers-driving-generic-drug.html?m=1
https://www.bloomberg.com/news/articles/2018-04-11/are-drug-prices-too-low
these are not cherry picked as negative articles, they are the first ones that came up and i couldnt find any positive articles suggesting a turnaround/ recovery.
next i looked at the q1 and q2 2018 results from the 3 giants of US generics ie teva, mylan and novartis (their generics division is named sandoz).
1) The Latest generics update from novartis re the q2 2018 results came out just a couple of weeks ago in july, this copied direct from their website:
“Q1: Sandoz net sales in the quarter (q2 cy 2018) were USD 2.5 billion (0%, -2% cc) in the second quarter, as
9 percentage points of price erosion, mainly in the US, were largely offset by 7 percentage points of volume growth...
Q1 + Q2 ie First half (h1 cy2018) sandoz financials: “Sandoz net sales were USD 5.0 billion (+2%, -3% cc) in the first half, as
8 percentage points of price erosion, mainly in the US, were partly offset by 5 percentage points of volume growth. Excluding the US, net sales grew by 5% (cc).
Finally, novartis’ / sandoz’ outlook guidance for 2018cy:
From a divisional perspective, we expect net sales performance (cc) in 2018 to be as follows:
▪ Innovative Medicines: grow mid-single digit
▪ Sandoz (generics division):
revised downwards to decline low-single digit (ie a downgrade in guidance)
▪ Alcon: revised upwards to grow mid-single digit
2) Mylan:
2nd largest drug company by prescription/ sales volumes in USA and 80-85% of their North america revenue is generics.
their q2 results are to be released august 8th so we should look at those carefully this week.
q1 results were opaque because reported by geographical segment and not split between branded and generics, but
overall sales were down 19% and profits down 22% for the quarter. the only comment provided in company announcements is that large contributors were reduction in the epipen sales and the
re was also a small decline in both volumes and prices.
3) teva:
the giant israeli firm which is majority generics but also some branded drugs now reports by world segment similar to mylan. they just reported their q2 results on thursday.
They stated that for the USA/ nth america,
Generic products revenues declined 29% to $947 million in the quarter
due to price erosion and increased competition for Concerta authorized generic. The CEO stated that Significant competitive and pricing pressure is still hurting the U.S. generics industry and he isnt expecting any improvement in lric ng, rather that this is the new normal going forward.
shares dropped 10% on the day because q2 results fell short of expectations and because of the ceo’s negative forward guidance and because they had rallied at least 20% over the last 2-3 months, similar to myx....
my take home from all this is i wont be buying any shares at these prices because generics is the largest segment of myx by far. mcs, api and sbd are all small by comparison and wint offset the generics division pain.
by the way im not short and i dont want to push the sp down, i dont believe hot copper is that powerful. im just sharing my research and would be grateful to others who do the same regardless of whether their research/ analysis suggests myx is under or overvalued etc.
gltah. lets see what the mylan report is like this week.
