MORGANTOWN – Mylan saw its total third quarter revenues fall by 4 percent compared to the same period in 2017, it said in its new 8-K report filed Monday with the SEC.
Restructuring and remediation at the Morgantown plant played a role in the loss.
Total revenues for the quarter were $2.86 billion, down 4 percent from $2.99 billion in 2017. Nine-month 2018 earnings of $8.36 billion were also down 4 percent from 2017’s $8.67 billion.
Mylan attributed the loss to a 14 percent decline in North American sales – $1.10 billion for the quarter compared to $1.17 billion for 2017. Nine-month North American sales were $2.998 billion, down 18 percent from 2017’s $$3.667 billion.
Mylan cited several reasons for the North American decline:
— impact of the implementation of new accounting standards;
— lower volumes including EpiPen Auto-Injector sales;
— the divestiture of certain contract manufacturing assets;
— the loss of exclusivity of a product;
— actions associated with the restructuring and remediation program at the Morgantown plant.
Mylan CEO Heather Bresch said: “Mylan’s third quarter performance was in line with our expectations and we delivered solid year-over-year growth. Our confidence in the company’s bright future extends well beyond any single factor or particular quarter, including the current, short-term macro market turbulence our industry is experiencing.
“Year-to-date,” she said, “we have launched nearly 475 new products across our segments, including a record number of complex generics and biosimilars for Mylan. … We remain committed to our full-year 2018 guidance, and this confirmation is not dependent on any single product approval or launch. As we look ahead, we’re very optimistic about our long-term growth prospects as we have secured almost all regulatory approvals necessary for our key 2019 product drivers around the world.”
Mylan explained the Morgantown plant situation at length. The U.S. Food and Drug Administration inspected the plant earlier this year and made observations through a Form 483 report listing conditions that may constitute violations of the Food Drug & Cosmetic Act and related acts.
Mylan, in turn, submitted a “comprehensive response and robust improvement plan” to the FDA.
During the second quarter of 2018, Mylan began a restructuring and remediation program aimed at reducing complexity at the Morgantown plant. The program includes the discontinuation and transfer to other manufacturing sites of a number of products, a reduction of the workforce and extensive remediation activities.
This led to a temporary disruption in supply of certain products, Mylan said. Once the remediation and restructuring is completed, it anticipates improved costs, efficiencies and profitability from the operations at the plant.
Mylan said manufacturing costs related to transferred products will be reduced and many of the discontinued products have lower than average gross margins. “In addition, as it relates to North America, no significant new product revenue is forecasted from the Morgantown facility in 2019, and only eight of our top 50 gross margin generating products and only one out of the top 10 are currently manufactured in Morgantown.”
Mylan said it incurred expenses amounting to about $97.7 million and $184.2 million for the three and nine months ended Sept. 30 for incremental manufacturing variances, site remediation and restructuring charges.
“Mylan remains committed to maintaining the highest quality manufacturing standards at its facilities around the world and to continuous improvement in a time of evolving industry dynamics and regulatory expectations.”
Despite the overall loss in sales, earning per share rose 14 percent for Mylan stockholders: from $1.10 in the third quarter 2017 to $1.25 in 2018.
Third quarter Europe segment net sales stayed flat compared to 2017, at $1.04 billion. Rest of World segment net sales rose 4 percent, from $743.3 million in 2017 to $773.7 million.
Mylan President Rajiv Malik said, “This record year of scientific accomplishments represents a significant milestone in the company’s nearly 60-year history. Our recent successes demonstrate the strength of our scientific platform and our ability to manage and execute on new products, including complex generics and biologics. These milestones are the culmination of years-long scientific investments and reinforce our dedication to enhance access to patients.”
