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What’s Driving Growth in Mylan’s Generics Segment?

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Sep. 26 2016, Updated 7:06 a.m. ET

Generics segment

As we discussed previously in this series, Mylan’s (MYL) 2Q16 revenues were mainly driven by 4% growth at constant exchange rates in its Generics segment sales. The segment reported a rise to $2.14 billion during 2Q16, as compared to $2.06 billion during 2Q15.

The segment develops, manufactures and distributes generic products across the US, Canada, Europe, India, and other emerging markets. Mylan reports the revenues for generic products based on the region of sales.

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North America

Since January 2016, Mylan has included its Brazil operations in North America and has classified its revenues from third-party sales in the United States, Canada, and Brazil, collectively, as revenues from North America. The company reported net sales of $1.01 billion from North America in 2Q16—a 6% rise over its 2Q15 revenues.

The growth of revenues during 2Q16 was driven by new products launched during the past 12 months. This growth was partially offset by lower prices and lower sales of established products.

Europe

Mylan reported net sales of $604.2 million from European markets in 2Q16—a rise of 6% over its 2Q15 revenues. This growth in revenues in 2Q16 was driven by an increase in volumes of new products and established products, and to an extent, to the favorable impact of foreign currency exchange.

Rest of the World

Mylan has classified its revenues from third-party sales in India, Japan, New Zealand, Japan, and other emerging markets as the revenues from the Rest of the World. The company reported net sales of $523.2 million from this region during 2Q16, which is a fall of 2% in constant currency over 2Q15 revenues.

The fall in revenues in 2Q16 was driven by lower prices and sales volumes for emerging markets, but the fall was partially offset by higher sales in Japan and the performance of new products.

To gain exposure to Mylan while divesting risk, investors can consider ETFs like the PowerShares Dynamic Pharmaceuticals ETF (PJP), which has 4.1% of its total assets in Mylan. PJP also has 5.1% of its total assets in Amgen (AMGN), 4.5% in Gilead Sciences (GILD), and 5.2% in Eli Lilly (LLY).

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