Oh, the good old days of late 2004, when you could have bought into top-notch generic drugmakers like Teva
Mylan's fiscal third quarter was more about better growth tomorrow than performance today. Revenue was up about 7%, as a new transdermal pain patch helped offset lower sales of products like omeprazole (the generic form of AstraZeneca's
Investors seemed most excited by the company's guidance for fiscal 2007 -- its midpoint was about 6% higher than the prior average estimate.
Mylan certainly has its charms. The company recently struck a good deal with ForestLabs
In addition, Mylan seems to have a solid pipeline of its own. The company has 60 filings pending with the FDA (representing approximately $44 billion in branded sales) and would be first to file on 13 of them -- in the generics world, being first to file for a new drug gives the company a window of marketing exclusivity. Of course, a pipeline is no guarantee -- for example, while the company is cleared to begin selling generic Ditropan XL fairly soon, it's still battling with Pfizer
Mylan is certainly better off today than it was just a short time ago (when it suffered from a weaker pipeline), but that doesn't automatically make this company a bargain. I expect meaningful improvement in cash flow over the next few years, but even if that's the case, the stock seems to already account for that. As a result, I just can't get too excited about paying brand-name prices for this generics company.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares). Pfizer is a Motley Fool Inside Value pick. The Fool has a disclosure policy.