Opinions
Brian Acker, CA
Mylan Inc
MYL-Q
BUY
Oct 07, 2004
Stock price when the opinion was issued
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Long. (A Pairs trade with a Short on Valeant Pharma (VRX-T). In a Pair trade you really have conviction on both sides. In this instance, while he likes Mylan as a Long hedge position, the conviction actually lies with Valeant as a Short, which still has a lot of fundamental problems ahead of them.
They jacked up the price of the EpiPen and it gave a whole credibility issue problem to the company and brought it under some pressure. Healthcare and technology are those things that are going to grow in almost any market environment over the next number of years. This company is pretty well positioned. They argued their case effectively.
Epi Pens. They are very expensive, $600 each. They then offered a $300 generic version. There are now competitors, but they own 90% of the market place. The stock took a bit of a hit, but she still likes it and thinks they will keep market share even if prices come down a bit for Epi Pens.
People really hate this, and unfortunately it has become one of the poster children of aggressive drug pricing, high compensation of the C suite, the EpiPen debacle, and kind of a lacklustre performance. Thinks this is going to be under a lot of pressure. He would suggest that you switch into Celgene (CELG-Q).
TEVA-N vs. MYL-Q. He does not like either at these prices. They are both generics manufacturers. There are lots of headwinds on pricing in these categories. We have had a lot of noise on pricing of pharmaceuticals. The FDA is going to alleviate the delays on getting new drugs to market. He wants to be in pharmas that have innovation. He is concerned about how their business model will fair over the next 5 years.