Drugs manufacturer Mayne Pharma is still feeling the impact of tough competition and lower prices in the generic drugs market in the US, but expects the release of new drugs and restructuring initiatives will boost the company’s financial performance.
Chief executive Scott Richards said the company’s first half is expected to be “soft” but that a range of initiatives is already yielding benefits.
Shares in Mayne Pharma dropped 1.5 cents, or 2.4 per cent, to 61 cents.
The company said revenue for the first four months of the financial year had fallen by 12 per cent to $151 million because of lower prices in the US generic drugs market arising from aggressive contracting behaviour by wholesaler and retailer buying alliances.
But, Richards said, the downward pressure on pricing had not resulted in consumers paying less for medicines.
Mayne Pharma’s results had been affected by extraordinary stock obsolescence charges, the discounted sale of stock nearing expiry date, and the loss of exclusivity on Doryx 50mg and 200mg tablets.
Doryx is an antibiotic used to treat infection and acne, and to prevent malaria.
Richards said Mayne Pharma was in a strong position to weather the challenging market conditions, given its solid balance sheet, specialty brands and experienced team.
“We are working on a range of initiatives which we expect will vastly improve future performance, and which are already yielding improved trading results in October and the present month,” Richards told shareholders at the group’s annual general meeting on Tuesday.
Net sales of generic products were up 25 per cent in October compared to the monthly average in the current year’s first quarter and gross profit was up 50 per cent.
The drug maker has expanded its dermatology sales team, restructured its supply chain, improved co-payment management for its branded products, sought new opportunities to gain market share in the generics business, and is set to launch new products.
“Together with normalised levels of product returns and stock obsolescence, these initiatives are expected to drive a very strong recovery in financial performance in the second half and beyond,” Richards said.
Mayne Pharma expects to receive US Food and Drug Administration approval for six generic products targeting markets with sales of $US500 million ($A657.3 million) in fiscal 2018, and eight generic products with a market of $US2 billion in 2019.
Mayne Pharma in August reported an $86 million full-year profit on revenue of $572.6 million.