With a proxy battle looming, Mylan NV (MYL) CEO Heather Bresch spoke in both enthusiastic and defiant tones at the Goldman Sachs Healthcare Conference Wednesday, June 14.
She defended Mylan from its critics, blaming its challenges on industry headwinds and misperceptions about the company.
Questioned by Goldman analyst Jami Rubin whether she cared about corporate governance, Bresch was strident in her response.
"Of course, I care about governance," she said. "I care about Mylan, I care about our commitment to truly bring access to 7 billion people affordable medicine. We've got over a 55-year track record of doing that. So, of course, I care, and it's something that the board talks about, and those discussions, I promise you, take place."
Mylan shares closed down Thursday, falling 90 cents, or 2.38%, to $36.98.
Mylan, a global pharmaceuticals company perhaps best known for its EpiPen product, has about 7,500 products it markets on an international basis and about 35,000 employees. The U.K.-based company has found itself immersed in controversies ranging from the substantial price increases of EpiPens to watching an ill-fated merger attempt with Perrigo go south. The company agreed to pay $465 million to settle federal charges that it overcharged Medicaid patients.
Speaking at the Rancho Palos Verdes, Calif., conference, Bresch said her company has invested for the long term and delivered for investors in the short term. She said Mylan expects to be on the acquisition side of potential deals, and that while the company is open to any discussions, she did not see Mylan making a move simply for the sake of being active.
The company is gearing up for its June 22 annual meeting as a substantial battle rages for the votes of shareholders being courted by Institutional Shareholders Services, Glass Lewis, a trio of activist pension funds and the company itself.
Glass Lewis has called for shareholders to give the boot to three directors on the compensation committee. The pension funds, New York City's Comptroller's Office, fronting for the New York City Pension Funds, the California State Teachers Retirement System and Dutch pension fund manager PGGM, are asking shareholders to reject the roster of six directors backed by Mylan. ISS wants to bring a wrecking ball to the corporate suite, calling for all 10 of Mylan's directors to be shown the door, including chairman and former CEO Robert Coury.
The critics have also pointed to Coury's pay package as excessive at an estimated $97 million in 2016.
Bresch insisted that ISS and other critics have mischaracterized the nature of Coury's pay package. "There's just a lot of misperceptions and misleading information out there," she said. "This idea that it was $100 million for 2016 is just not true. The reality is, he retired from an executive position after 15 years with the company, and moved to chairman. Close to 90% of that number is for the 15 years that he served Mylan."
During his tenure Mylan grew from a $3 billion market cap to $21 billion market cap, Bresch argued. "That track record speaks for itself."
Bresch asserted the Mylan was one of the first in this industry to tie our incentive comp to performance, for both long term and short term. So there are many factors that play into that, it's not just EPS," she said. "If you look at the last decade or even the last five years of [compound annual growth] that we've continued to deliver. . . while investing billions of dollars in R&D. We haven't sacrificed investing--from generic Advair to complex, to building a plant, a standalone facility for generic Advair. I mean, we have not short changed our investment, whether you look at biosimilars, we've got one of the largest portfolios in the industry."
"The reality. . .that we've continued to be a company that's delivered on the short term while investing in the long term."
Mylan has no obligation to dump directors even if a large majority of its shareholders vote against the incumbents. But such a vote might prompt the company into making a move on those sitting at the table or even trim Coury's paycheck.
In a June 12 shareholder letter, Mylan criticized the pension funds and press reports as misleading. It defended its board as diverse and responsive to shareholders. The company said Coury's pay was aligned with the interests of both the company and shareholders, adding that his pay had previously been disclosed in proxy statements.
Most dramatically, the company defended itself regarding the pricing of EpiPens. The price of the injectable allergy medicine has been hiked 17 times in 10 years, from about $100 to $600 for a pair. Mylan maintains that after skyrocketing drug prices and the EpiPen became bold issues, the company cut the list price of the product by 50% and launched a generic version which now makes up 40% of the epinephrine auto-injector market. The letter stated that about 90% of consumers pay out of pocket less than $100, and more than 80% pay less than $50.
In an emailed June 12 statement to TheStreet, a company representative said, "Our shareholders recognize that this Board has overseen a period of strong and sustainable long-term growth and that the recommendation and rationale to remove the Board and leave the company without any leadership is simply irrational and not in shareholders' best interests."