Controversy Pullback Offers Good Entry Point For Mylan

Argus’ Jacob Kilstein believes generic drug companies would “continue to benefit from the increased focus on cost-effective healthcare.”

Kilstein maintains a Buy rating and a $55 price target on Mylan NV MYL.

Attractive Entry Point

The stock has declined 17 percent over the past month, driven by negative publicity associated with Mylan’s sharp price hike for EpiPen.

However, the analyst believes this pullback offers an attractive entry point.

The EpiPen Price Hike

The company raised the price of a pack of two EpiPen shots to $600, a sharp increase from the $100 it was priced at when the product was acquired in 2007.

Related Link: Mylan's CEO Showed "Very Little Empathy," Bill George Says

“Mylan has responded to the public criticism in a number of ways. It pointed out that most patients pay less than $100 out-of-pocket because insurance covers most of the cost, and that many patients and schools had access to free EpiPens,” Kilstein mentioned.

The company also offered $300 coupons to some of the users, while on August 29, Mylan announced that it launch a generic EpiPen in the near future, priced at $300.

“While the generic product will cannibalize branded sales, it should help to ward off competition from… other potential generic manufacturers, and give Mylan the advantage of being first in the generic EpiPen market,” the analyst explained.

In fact, if the company were to launch its generic version within the next month, Mylan would have an 18-month window where there would be no competition.

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