What happened

In response to receiving a double dose of good news from the Food and Drug Administration (FDA) and some bullish commentary from Wall Street, shares of Impax Laboratories (NASDAQ:IPXL), a maker of generic and branded pharmaceutical products, rose 18% in July, according to data from S&P Global Market Intelligence.

So what

Impax shared two upbeat regulatory news items with investors during the month. First, Impax announced that the FDA approved its generic version of Focalin XR (dexmethylphenidate hydrochloride) extended-release capsules. Focalin XR is a treatment for attention deficit hyperactivity disorder (ADHD) that's marketed by Swiss pharma giant Novartis.

Branded and generic sales of dexmethylphenidate hydrochloride products in the U.S. over the last 12 months were estimated to be about $93 million. Management said that it would commence with the commercialization of the drug right away.

Group of three doctors giving the thumbs up

Image source: Getty Images.

Second, Impax announced that it had won FDA approval for a generic version of Concerta (methylphenidate hydrochloride) extended-release tablets. Concerta is another ADHD treatment that's marketed by Johnson & Johnson. Methylphenidate hydrochloride sales in the U.S. over the last year were about $1.8 billion, which makes this a huge market opportunity for the company. However, management is still working on securing raw materials for the drug's manufacturing, so a launch isn't expected until the end of the year.

Beyond the regulatory news, Impax also benefited from some positive Wall Street commentary. Two new analysts initiated coverage of Impax during the month and offered up price targets that are a few dollars higher than the current market price. What's more, a third analyst also upgraded the company's stock during the month.

Given the upbeat regulatory news and bullish analyst moves, it's easy to understand why shares jumped in July.

Now what

It's been a rough couple of years to be an Impax shareholder. The company has faced pricing headwinds with some of its generic drugs, and it was also forced to record more than $500 million in impairment charges related to its acquisition of 15 drugs from Teva Pharmaceuticals. Mix in turmoil in the corner office and guidance cuts, and it's understandable why investors have taken a beating over the past two years.

IPXL Chart

IPXL data by YCharts.

Looking ahead, new CEO Paul Bisaro certainly looks to have his work cut out for him as he attempts to get the company's growth engine back on track. While I wouldn't be against his success, there are some real headwinds facing the entire generic drug industry right now. For that reason, I think that caution is warranted.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.