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US exposed Mayne Pharma doubles FY profit

Christian Edwards  |  25 Aug 2017Text size  Decrease  Increase  |  

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SYDNEY - [AAP] Mayne Pharma Group's (ASX: MYX) expanded portfolio of generic and specialty products has offset tougher US market conditions as the expanding Australian drug maker doubled its full-year profit.

Mayne Pharma reported net profit to $86 million in the year to June 30, which was below guidance but well up on its $34.5 million a year earlier.

Mayne Pharma chief executive Scott Richards said the August 2016 acquisition of a generic portfolio from Teva Pharmaceuticals delivered an almost trebling of revenue for the division to $418.7 million.

Total revenue jumped to $572.6 million from $267.3 million on the success of high-margin exclusive generics like anti-cardiac arrhythmia drug dofetilide.

The company said the transfer of 27 acquired Teva products was advancing and should lead to improved product margins and annual cost savings of $US12 million ($A15 million) by FY19.

However, the group reported a $25 million non-cash pre-tax hit, largely relating to asset impairment and the reassessment of the useful life of the Teva portfolio assets to 15 years.

Mayne Pharma's 2017 result was also tempered by the recent large-scale bidding of key wholesale customers--McKesson, Walmart--and the buying alliance group between Walgreens and AmerisourceBergen.

Together they represent about 80 per cent of Mayne Pharma's business.

Pharma expects annual US generic price deflation to run ahead of the historical 5 per cent "for some time yet."

Pharma plans to evolve alternate distribution channels, but expects the majors to remain a dominant feature of the US landscape.

"Those big customers are going to remain the cornerstone of the US generics industry," Mr Richards said.

In the US, Pharma added 14 products to its pipeline, filed five products with the US Food and Drug Administration and received approval for four generic products.

Revenue from the specialty brands division was down 20 per cent to $61.9 million following the loss of exclusivity on a key branded product Doryx, in May last year.

The launch of acne foam Fabior and psoriasis foam Sorilux in January drove a second-half return to profitability and has been followed by new launches.

Pharma currently has 19 products lodged with the FDA and could benefit from faster approvals as new FDA boss Scott Gottlieb earmarked accelerating competition in the generics market as one of his big goals.

Pharma said it plans to continue to invest in higher-value and niche products with a development pipeline including over 40 products targeting US markets with sales greater than $US6.5 billion.

There was no final dividend for the second consecutive year, in line with Mr Richards' pursuit of
growth over dividend philosophy.

Mayne shares were down 3.9 per cent to 68 cents at 1430 AEST.

MAYNE'S FULL-YEAR GAIN:

* Net profit $86m v $34.5m

* Revenue up $572.6m v $267.3m

* No final dividend again

 

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