Mylan Soars as Drug Approval Deals Blow to Teva Blockbuster

Updated on
  • Teva bond hits record low, ADRs plunge as competition looms
  • Mylan to begin shipping copies of Teva’s Copaxone shortly

Mylan NV shares surged Wednesday after the company won U.S. regulators’ approval for the first generic copies of Teva Pharmaceutical Industries Ltd.’s best-selling multiple-sclerosis drug Copaxone, threatening the Israeli drugmaker’s key product and sending its stock and debt plunging.

Mylan plans to soon begin shipping a generic copy of Teva’s Copaxone. The U.S.-based drugmaker was the first in line with the Food and Drug Administration to apply to make a 40-milligram dose of the blockbuster drug, which could give it 180 days as the lone generic option.

The treatment is Teva’s biggest product, and the 40-milligram format brought in $3.64 billion in the 12 months ended July 31, Mylan said in a statement announcing the approval.

The news sent Teva’s debt and stock down sharply. The bonds fell the most in the U.S. corporate debt market, according to Trace, the bond-reporting system. The 4.1 percent bond due in 2046 reached a record low of 81 cents. The American depositary receipts tumbled the most in two months, closing down 15 percent at $16.08.

Mylan’s shares had their best day in almost nine years, rising 16 percent to $37.80.

“Mylan has invested tens of millions of dollars over many years to bring this important medicine to market,” Chief Executive Officer Heather Bresch said in the statement. The approval reinforces “our proven capabilities in bringing complex and difficult-to-manufacture products to market,” she said.

The shares of Mylan’s partner in manufacturing the generic medicine, Hyderabad, India-based Natco Pharma Ltd., surged as much as 20 percent in Mumbai.

More Generics

The approval is a sign that the FDA’s plan to get more generic drugs on the market -- especially costly therapeutic categories with limited competition -- may be gaining steam.

Copaxone is an injection, making it more complex to manufacture than a pill. Generics for those types of drugs have been slower to arrive than simpler pills.

“The news validates the company’s ability to execute on complex generics,” said Irina Koffler, an analyst with Mizuho Securities. “We think Advair is next,” she said, referring to a blockbuster asthma medication made by GlaxoSmithKline Plc.

Canonsburg, Pennsylvania-based Mylan also got approval for a generic version of 20-milligram Copaxone, with about $700 million in sales. Momenta Pharmaceuticals Inc. and Novartis AG’s Sandoz unit already sell a generic 20-milligram once-daily dose of Copaxone.

Another Setback

For Teva, the world’s biggest manufacturer of generic drugs, the approval is another blow in a tumultuous year. It has reduced its dividend, sold assets and cut jobs in a bid to pare the $35 billion debt load accumulated funding acquisitions.

Teva is “confident” it won’t see a generic version of 40-milligram Copaxone in 2017, but if one did come in the last three months of the year it will erode earnings, Michael McClellan, Teva’s interim chief financial officer, said in an Aug. 3 conference call.

On Wednesday, Teva said that any drug launch of generic Copaxone 40 mg would be considered “at risk” because the patents on the drug are still being fought out.

“We would expect generic versions of Copaxone 40mg will lead to more significant pricing pressure on the brand and also more rapid volume loss,” said Vamil Divan, an analyst with Credit Suisse. He rates the shares underperform.

Divan said the approval is likely to further pressure Teva’s financial forecast, and could take 20 to 25 cents out of its earnings per share in the fourth quarter.

— With assistance by Yaacov Benmeleh, Adam Tempkin, Brian W Smith, and Molly Smith

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