Disclosure: I own MYL and TEVA stocks
Generic pharmaceuticals maker
• | Adjusted diluted EPS of $0.78 for the three months ended December 31, 2013 compared to $0.65 for the same prior year period, an increase of 20% |
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• | On a GAAP basis, diluted EPS of $0.45 for the three months ended December 31, 2013 compared to $0.39 for the same prior year period, an increase of 15% |
• | Adjusted diluted EPS of $2.89 for the year ended December 31, 2013 compared to $2.59 for the same prior year period, an increase of 12% |
• | Total revenues of $6.91 billion for the year ended December 31, 2013 compared to $6.80 billion for the same prior year period, an increase of 2% , despite 2013 new product revenues being 69% lower than 2012 |
• | On a GAAP basis, diluted EPS of $1.58 for the year ended December 31, 2013 compared to $1.52 for the same prior year period, an increase of 4% |
At noon Mylan's stock was up close to 10 percent. Other generic drug stocks have been also rallying in sympathy.
As we wrote in a previous piece, the generic drug industry stands to benefit from two trends.
First, the massive aging of baby boomers, which is expected to boost demand for pharmaceuticals for years to come. This trend began around 2005, as the first baby boomer cohort crossed the age of 60. It’s a trend which is expected to last until 2024, when the last cohort crosses the age of 65. Worldwide, the over-60 portion of the population is expected to reach 30% by 2025, compared to 20% in 2000.
The second trend is the drive by healthcare providers to cut the soaring costs of pharmaceuticals.
But winning in the generic drug space isn’t easy. Competition tends to erode margins—Teva’s and
That could explain why Actavis (formerly Watson Pharmaceuticals) and
The merger fueled speculation that other generic companies will follow through. Wall Street’s Maureen Farrell thinks that Mylan Labs is next on line. That could be another reason for Mylan's big jump in recent days. I think Teva is a better bet.
In either case, both companies are good long-term investments, as they ride the right trends the right time.