Mylan-Upjohn Merger In Focus, Coronavirus Might Hit Supply

We issued an updated report on Mylan N.V. (NASDAQ:MYL) on Mar 6, 2020.

Once a global leader in the generics business, Mylan was facing challenging business conditions in North America and pricing pressures. The company undertook a strategic review of its business last year and decided to merge with Upjohn, Pfizer's (NYSE:PFE) off-patent branded and generic established medicines business (includes Lipitor, Celebrex and Viagra), to create a new global pharmaceutical company. Pfizer’s shareholders would own 57% of the combined entity, while Mylan’s shareholders would own the remaining 43%.

In November 2019, Mylan and Pfizer announced the name of the new entity to be Viatris. Subsequently, the companies have announced two future Viatris board members. The merger will be completed by mid-2020.

We view this merger as a positive since Viatris will have a diverse portfolio across many geographies and focus on key therapeutic areas.

The combined business (EpiPen, Lipitor, Celebrex and Viagra among others) will be one of the leading generic businesses in the world.

Mylan has been plagued with various problems, of late, like lawsuits and pricing pressure, among others. Hence, the merger with Upjohn will provide Mylan a chance to turn over a new leaf and focus more on emerging markets.

Moreover, Mylan’s biosimilar business is progressing well. The FDA approved Fulphila, a biosimilar of Neulasta, which has significant potential. A phase III study is underway for a biosimilar of Eylea, in collaboration with Momenta. Mylan recently launched Ogivri (trastuzumab-dkst), a biosimilar of Roche’s blockbuster breast cancer drug, Herceptin (trastuzumab), in the United States. The biosimilar of Avastin is already under review in the United States.

Last week, Mylan reported fourth-quarter results, wherein earnings beat estimates but sales missed the same. Nevertheless, the company’s new products did well in the quarter and achieved the target of $1 billion from Wixela, the generic of GlaxoSmithKline’s (NYSE:GSK) Advair Diskus; Fulphila; and several other products. Other products like Creon, Influvac, Dona, Amitiza and Glatiramer Acetate 40 mg generated double-digit growth. Yupelri, developed in collaboration with Theravance Biopharma, Inc (NASDAQ:TBPH) , also boosted growth.

However, Mylan warned that its business might be negatively impacted by the outbreak of the coronavirus epidemic, given the global nature of the company’s supply-chain operations and businesses.

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