2017 revenue and earnings guidance
In its 2Q17 earnings conference call, Mylan (MYL) reduced its revenue guidance for 2017 from a range of $12.25 billion–$13.75 billion to a range of $11.5 billion–$12.5 billion, mainly due to rebasing its North American business. The company’s adjusted EPS (earnings per share) is also expected to be in the range of $4.30–$4.70, a fall from the previously projected range of $5.15–$5.55. Mylan, however, is confident that the revenue and earnings contributions from Europe and Rest of World (or ROW) markets will remain on track with previously stated expectations. The company expects to witness more than a 30.0% YoY (year-over-year) growth in Europe and more than a 20.0% YoY growth in ROW markets in 2017.
Mylan has also lowered its adjusted EPS guidance for 2018 from $6 to $5.40, which is still 20.0% higher than the midpoint of its 2017 EPS guidance. In addition to deferred product launches, increasing competition for the EpiPen, ongoing financial and operational optimization activities, and capital deployment measures are expected to exert pressure on Mylan’s EPS in 2018. That could have an unfavorable impact on MYL stock as well as the stock of the PowerShares QQQ ETF (QQQ). Mylan makes up about 0.27% of QQQ’s total portfolio holdings.
Wall Street analysts have projected Mylan’s 2017 revenues to be about $12.0 billion, which is a YoY growth of around 8.2%.
Challenges in North America
In the first half of 2017, Mylan had third-party sales of $1.3 billion in its US market, which is a YoY fall of 9.0%. However, if EpiPen sales had not fallen at a much faster pace than anticipated, the company would have managed to increase its third-party sales in the United States by 4.0% on a YoY basis. The company saw increased competition for its generics business since the FDA (U.S. Food & Drug Administration) has significantly accelerated the rate of approvals for third, fourth, and fifth generic versions of drugs. However, due to the ongoing reorganization at the FDA, approvals for first generics and generic versions of complex and niche drugs have been delayed. These challenges affected Mylan’s revenue performance in the first half of 2017.
In the next part, we’ll take a look at Mylan’s revenue growth prospects.