Mylan (MYL) probably wouldn't win the People's Choice award for favorite public company if such an award existed. The drugmaker has come under fire from all sides this year for jacking up prices of its EpiPen auto-injector. Mylan's management had a chance to present its side of things in the company's third-quarter results conference call on Wednesday. Here's what they want you to know. (All quotes courtesy of S&P Global Market Intelligence.)
1. We're not just EpiPen
While many Americans think of EpiPen when they think about Mylan, the company's executives stressed that Mylan isn't about just one product. Mylan CEO Heather Bresch noted that the company is "anticipating EpiPen's contribution to be approximately 6% of total sales in 2017."
There's no question, though, that EpiPen's importance to the company's bottom line was much greater in the third quarter. Mylan reported a big loss primarily because of a $465 million settlement with the U.S. Department of Justice and other government agencies over allegations that the company improperly classified its EpiPen products so it could pay lower rebates to Medicaid.
2. We didn't create the system, we just play by its rules
If you think Mylan's executives would express any remorse over the controversial pricing of EpiPen, think again. Heather Bresch said, "We have acknowledged that the current system, which we didn't create, but which we must compete in, was not built for consumerism..."
Bresch noted that Mylan isn't "blaming the system." She said that Mylan has started "a discussion about the transparency that's needed and that people understand the complexity around the pricing."
Mylan's team didn't (and likely never will) say that the price hike for EpiPen was wrong. Instead, they maintain the higher price was justified but that consumers shouldn't have to pay as much. Bresch said she wished the company "had better anticipated the magnitude and acceleration of the rising out-of-pocket cost for a growing minority of patients who may have ended up paying full WAC [wholesale acquisition cost] or more when they went to the pharmacy counter."
3. We're not limited to the U.S.
In her opening remarks, Heather Bresch emphasized that "Mylan is much more than any one product and our reach goes far beyond any one market." She went on to state that while "the future of the U.S. healthcare system maybe unclear, one thing is certain, the world can count on Mylan..."
This sentiment was echoed throughout the call. Mylan president Rajiv Malik underscored that Mylan remained focused on its global business despite public attention over EpiPen.
It makes sense that Mylan's management would focus on its global reach. The company's generic drug sales increased solidly in international markets. Only in the U.S. did Mylan report sluggish generic sales growth.
4. Biosimilars will fuel growth
Mylan likes the potential for its biosimilars. Rajiv Malik pointed to the company's recent submission for U.S. approval of a biosimilar to Herceptin. This was Mylan's first biosimilar regulatory filing in the U.S.
The company announced a deal with Momenta (MNTA) in January to develop and market six biosimilars. Mylan paid Momenta $45 million up front with up to $200 million to follow in milestone payments. Dosing in an early-stage study of Momenta's biosimilar to autoimmune disease drug Orencia began last week.
When the Momenta collaboration was first announced, Heather Bresch said biosimilars would be an important driver of future growth for Mylan. Malik confirmed this view in his comments, stating that the company's "broad portfolio of biosimilars" would help fuel Mylan's expansion.
5. Looking for "bolt-on" deals
Heather Bresch said business development efforts "going forward will emphasize bolt-on deals." Mylan CFO Kenneth Parks followed up, stating that the company had the "financial flexibility" to achieve its goals "while still deploying capital strategically for bolt-on acquisitions."
When asked what "bolt-on" really meant, Bresch replied that Mylan didn't "need to do any big acquisition" like the failed attempt last year to buy Perrigo. She said the company would instead focus on complementing its current therapeutic categories and products.
Beyond the words
Despite Mylan's attempts to change the subject, I suspect public and political pressure on the company over its EpiPen pricing will remain a headwind for the company. However, this should be an issue only for the near term.
The fundamentals for Mylan continue to be solid. Mylan's global reach and ability to make the "bolt-on" deals mentioned by Heather Bresch should help the company achieve solid earnings growth. Mylan's stock appears to be priced attractively thanks in no small part to the EpiPen controversies. I think Mylan will be a winner for investors with a long-term perspective.