Mylan NV's (MYL) woes winning federal approval for two potentially profit-driving generics shows how hard a time drugmakers have launching "biosimilars" to rival complex biologic drugs that have been fattening the bottom lines of their competitors.
On Wednesday, Aug. 9, Mylan reported second-quarter numbers that came in below analysts' estimates amid pricing pressures facing generics makers. The hit to Mylan's stock was compounded when CEO Heather Bresch relayed the bad news that the expected relief to the company's bottom line, two new biosimilars expected to roll out soon, cannot be counted on to contribute to the company's revenue until sometime in 2018.
"We have removed Copaxone and Advair from our 2017 financial guidance and have simply deferred them to 2018," Bresch told analysts participating in the company's second quarter earnings call Aug. 9.
The bad news prompted CFRA analyst Jeffrey Loo to to lower his 12-month target for Mylan shares by $8 to $34.
Mylan is counting on sales from its Copaxone and Advair biosimilars to pull it out of its funk, which has been caused by depressed generics prices, falling sales for its politically controversial EpiPen, and fallout from an investor campaign against the reelection of company directors and approval of Mylan's executive pay package.
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Mylan execs laid blame for delays squarely on the Food and Drug Administration, which they say has been too slow to approve competitors to complex biologics and have unwisely given priority to approving generics that will compete with more simple traditional brand name drugs that may already have three, four or more competitors on the market.
Traditional drugs made from chemical compounds are easier to make than biologics, which are produced from living cells and other biological ingredients.
Rajiv Malik, Mylan's president and executive director, said the FDA's timeline for approving the company's biosimilar to compete with Teva Pharmaceutical Industries' (TEVA) multiple sclerosis drug Copaxone has been changed several times despite there being "no pending scientific questions or any additional studies required."
"We are disappointed with the execution by FDA of this complex [application], as the administrative timeline continues to move despite a number of interactions as well as meeting all of the criteria for the product-specific guidance issued by FDA," he said.
The questions surrounding Mylan's generic for Advair are a little more clear cut, he said. "We very recently met with FDA with regards to the Complete Response Letter, which we received in late March," Malik said. "We were pleased with the highly constructive nature of our dialogue with the agency, and we were able to clarify and resolve a number of key points raised in the CRL. Based on this interaction, we can confirm that no further clinical or device-related studies are required, and we plan to submit our response to the CRL in the next couple of weeks."
Advair, an inhaled asthma treatment sold by Glaxo SmithKlein (GSK) , is third best-selling drug in the world.