The Mayne Pharma Group Ltd (ASX: MYX) share price has continued its disappointing run again today.
In early trade the pharmaceutical company's shares are down 7% to a 52-week low of 66 cents following the release of its full-year results.
Here's what you need to know:
- Revenue increased 114% on FY 2016 to $572.6 million.
- Underlying EBITDA up 133% to $206.5 million.
- Profit after tax grew 149% to $86 million.
- Diluted earnings per share of 6 cents.
Whilst this was an undoubtedly strong result from Mayne Pharma, it was of course driven by last year's acquisition of the generic drugs portfolio of Teva Pharmaceuticals and Allergan.
Mayne Pharma launched 50 new products in the US and Australia during the year, 37 of which were part of the aforementioned acquisition.
These launches helped its Generic Products division deliver a 292% increase in sales to $418.7 million. Gross profit in the division rose 259% to $218.3 million.
This helped to offset the 20% decline in sales from its Specialty Brands division. Gross profit in the division also fell 20% to $58.6 million. This was largely the result of the loss of exclusivity for its Doryx 50mg and 200mg products.
Should you invest?
As I have mentioned many times before, I believe that Mayne Pharma has enormous potential if drug prices remain favourable.
But with significant pressure being placed on generic drug prices in the United States, I do have major concerns that the company may have ultimately overpaid for the generic drugs portfolio it acquired last year.
Furthermore, as its Generic Drugs division accounts for 73% of sales, its performance is integral to the company's overall success.
As a result, I would suggest investors hold off an investment in Mayne Pharma until pricing pressures ease.
In the meantime I would suggest investors look at fellow healthcare shares CSL Limited (ASX: CSL) and Ramsay Health Care Limited (ASX: RHC) instead.
