Mylan's shares fall after FDA grants approval to additional generic fentanyl product

Shares of Mylan fell as much as 15 percent on Monday after the FDA approved Lavipharm's generic transdermal fentanyl product to treat chronic pain. Prior to news of the approval, Mylan was the only company in the US authorised to market a generic alternative to Johnson & Johnson's Duragesic (fentanyl) patch.

"We have stated many times that we factored additional fentanyl competition into our fiscal 2007 guidance, and we believe today's trading is an overreaction to an additional fentanyl approval," Mylan's CEO Robert Coury noted in a statement released Monday afternoon. For the second time in the same day, Mylan reiterated its full-year earnings-per-share guidance of between $1.35 and $1.55. Earlier Monday, Mylan had affirmed the earnings forecast when it issued a statement indicating that it did not expect the FDA to approve additional generic transdermal fentanyl products during its fiscal year ending March 31, 2007.

Commenting on the news, CIBC World Markets analyst Elliot Wilbur stated that "the bottom line is, it's bad news for Mylan and a stiff jab to the jawboning of CEO Coury, whose release this [morning] outlining the company's newfound confidence in no new generic entries this fiscal year confused many." Analyst Gregg Gilbert of Merrill Lynch added: "We believe that it will be difficult for Mylan to achieve our $1.34 earnings-per-share estimate for fiscal 2007, and the company's goal of $1.35 to $1.55 a share, if Lavipharm is able to launch the product relatively soon," MarketWatch reports.

Sales of Mylan's fentanyl pain patch, which is indicated in the US for the treatment of persistent, moderate-to-severe chronic pain, were estimated to be around $70 million in the second quarter.

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