Mayne Pharma Group Ltd

US generic industry experiencing declining revenue and gross profit margins: Mayne Pharma Group Ltd.’s (ASX: MYX) stock fell 3.2% on November 28, 2017 after its Annual General Meeting. MYX has been said to be facing a tough deflationary period in the US generic market due to the recent aggressive contracting behaviour from the major wholesaler/retailer buying alliances. The sector currently accounts for around 85% of retail generic drug purchasing together with a speed up of approvals through the US FDA. These changing market dynamics have impacted the whole generic industry leading to many of the company’s US peers reporting heightened levels of price deflation, together with softening sales, margins and earnings.

Owing to these shortcomings, the group’s revenue at the end of October fell 12% to $151m below the prior corresponding period. The year to date results have also been affected due to a number of factors that include extraordinary stock obsolescence charges, the discounted sale of stock nearing expiry date, the loss of exclusivity on Doryx 50mg and 200mg tablets, and impact following the significant investment in inventory to support the Teva portfolio acquisition. However, the group is still optimistic that release of new drugs and restructuring initiatives can drive financial performance.

MYX stock has fallen 8.09% in last three months as on November 27, 2017. We maintain our “Expensive” recommendation on the stock at the current price of $0.61
 

US Generics’ Share Price Performance (Source: Company Reports)

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