In FY 2018, the US generic industry faced a tough deflationary period due to customer consolidation and the acceleration of approvals through the US Food and Drug Administration (FDA). These changing market dynamics have affected the whole generic industry due to which many of the company’s peers have reported weaker results, restructured their operations and divested assets.
In FY 2018, Mayne Pharma Group Limited (ASX: MYX)’s revenue decreased by 7 percent to $530.3 million compared to the previous year. The company reported a net loss after tax of $134 million in FY 2018 compared to the last year profit of $88.6 million. These full-year results were impacted by a number of items which includes non-cash intangible asset impairment, extraordinary stock obsolescence, abnormal Doryx returns, a restructuring charge to reduce the cost base and a charge to income tax expense resulting from the US corporate federal tax rate change. There was a significant increase in the operating expenses of the company which was mainly due to the increase of market and distribution expenses to expand specialty brand sales team in the US. The administration expenses also increased due to an increase in the wages and salaries, insurance and rent. At the end of FY 2018, the company was having a cash of $87 million and outstanding borrowings of $374 million. The basic and diluted loss per share is 9.16 cents per share in FY 2018. The company holds positive net cash flow from operating activities of $137 million in FY 2018.
In the second half of FY 2018, the generic products performed strongly driven by the new product launches, normalized levels of stock obsolescence, portfolio optimization and cost savings from the transfer in of Teva acquired products. The Company has also invested more than $150 million over the last three years to transform its manufacturing facilities to bring new capacity and capability on line and support the mid to long-term growth. The company is having R&D capitalization rate of 73 percent in FY 2018. This rate is expected to decline in the upcoming years as the company is planning to invest more in research and development of specialty products and early-stage clinical development programs. The Company is expecting a new sales team in place during Calendar Year 2019.
In the last three months, the share price of the company increased by 31.46 percent as on 12 October 2018. MYX’s share traded at $1.155 with a market capitalization of $1.84 billion as on 15 October 2018 (AEST 4:00 PM).
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