Mylan NV said U.S. approvals of the first generics to market have slowed amid an ongoing reorganization at the U.S. Food and Drug Administration, even as the agency tries to spur greater competition to lower medicine costs.
Citing the regulatory environment, Mylan announced that it would push back all its planned drug launches in the country until next year. These include the launches of generic versions of GlaxoSmithKline plc's Advair asthma drug and Teva Pharmaceutical Industries Ltd.'s Copaxone for multiple sclerosis.
That means delays in huge sales opportunities for Mylan: Advair was GSK's best-selling medicine last year, bringing in £3.49 billion, while Copaxone generated $4.22 billion for Teva in 2016.
The decision to postpone these generic launches came from "an abundance of caution," CEO Heather Bresch said on the drugmaker's second-quarter earnings call.
"We honestly see the administrative as the barrier, not the science," Bresch said.
While the FDA has accelerated the process for bringing a second, third or fourth generic to market, that speed has not carried over to the first generic of a brand product, President Rajiv Malik said, adding that more complex or niche products are stalled in particular.
Advair, for example, is delivered via a special inhaler device, making it more difficult for generic manufacturers to copy. Mylan's generic Advair was rejected in March, followed by a rejection for Hikma Pharmaceuticals PLC's version of the asthma drug and cooled expectations for a generic within the year. While Mylan has not shared the response letter from the FDA, Malik said that no further studies are required and they expect to submit a response to the agency in the next few weeks.
As a result of the launch delays, the company cut revenue and EPS guidance for the rest of the year.
Sentiment was down on Mylan ahead of its earnings, after Teva, the biggest generic maker in the game, had cited its own struggles in the U.S. generics market as the driver of significant misses and guidance cuts for revenue and EPS.
'We're not running away' from generics
Asked about similarities to Teva's U.S. difficulties, Bresch said Mylan is in a stronger position due to its global business. Europe and the rest of the world represented about $1.65 billion of this quarter's revenue, compared to about $1.28 billion for North America.
"Are there challenges in this U.S. market, which is the largest pharmaceutical market in the world? Absolutely, and we're not running away from that," Bresch said.
"You can put as much competition in that generic marketplace as you want. But as you look to the right the supply chain, the lack of competition, everything to the right of the manufacturer has continued to constrict," she said, seemingly referring to pharmacy benefit managers, or PBMs. She added that the space is down to three buying groups.
Express Scripts Holding Co., CVS Health Corp.s Caremark and UnitedHealth Group Inc.'s OptumRx make the drug coverage decisions for more than 280 million patients in the U.S.
Mylan's EpiPen has held off competition from generic injectable allergy medicines through a combination of its own generic and likely rebates and discounts to these PBMs.
Express Scripts, which manages prescriptions for about 83 million people, kept Mylan's EpiPen and the company's generic version on its formulary for the upcoming year and excluded two other options. EpiPen is also on the preferred list for CVS Caremark, covering nearly 90 million, though the pharmacy benefit manager also provides a non-Mylan generic alternative.
Mylan's EpiPen still has 70% of the auto-injectable market for allergic reactions, Malik said. However, Bresch noted that EpiPen is going to be less than 5% of the company's profit going forward.