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Positive outlook despite Mayne's $134m full-year loss

Emma Rapaport  |  24 Aug 2018Text size  Decrease  Increase  |  
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The specialty drug-maker exceeded analysts' expectations on an adjusted basis, despite posting a full-year loss of $133.98 million.

Revenues for the year ending June 30 fell 7 per cent to $530.3 million, from $572.6 million in 2017, and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell 20 per cent to $165.3 million.

Mayne Pharma (ASX: MYX) management said performance was substantially stronger in the second half, with revenue and EBITDA up 18 per cent and 35 per cent in this period. Adjusted net profit after tax also climbed 171 per cent in the first half.

Morningstar equities analysts Chris Kallos described the result as "better than expected", exceeding both his and the broader market expectations.

"[Mayne Pharma] had a tough 2017 with massive vertical international between end retail groups and distributors creating a major wave of price deflation which really hit their bottom line," Kallos says.

pharmaceutical medical

It was a year of two-halves for the pharmaceutical business.

"At the same time, the supposedly 'game changing' and 'highly defensive' portfolio of generic drugs they bought from Teva Pharmaceuticals was diminished following the passage of the Generic Drug User Fee Amendment Act in the US – accelerating the speed at which the FDA [United States' Federal Drug Administration] approved new generics."

However, he believes Mayne is turning a corner, with momentum continuing in the second half.

Within its generic products division, he says: "it appears price deflation is not getting better but it's not getting worse."

Kallos also praised its launch of six new products in the last half-year, noting "they still have a good run on them."

He anticipates Mayne's upcoming product line, a generic version of contraceptive ring NuvaRing, is among several in front of the FDA.

Mayne's specialty brand division is also performing well, nudged along by an increased sales force. "They've gone wider and deeper, getting more clinicians on board and more scripts written," Kallos says.

The key near-term headwinds for Mayne are its primary product Dofetilide, which will come out of patent in October. "We expect generic Dofetilide products to hit the market soon after, putting downward pressure on price," Kallos says.

No dividend has been declared for fiscal 2018. Mayne's share price was trading at $1.11 at 3pm, a slight premium Morningstar's $1.05 fair value estimate.

 

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Emma Rapaport is a reporter for Morningstar Australia.

© 2018 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.

is an editor for Morningstar.com.au

© 2020 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

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