Supply constraints push EpiPen rival maker Amneal to restructure, shares fall
Amneal Pharmaceuticals, which sells a generic epinephrine auto-injector similar to Mylan’s flagship Epipen, has initiated a sweeping restructuring of its business driven primarily by the uncertainty surrounding the supply of the emergency shot.
The Bridgewater, New Jersey-based company — which develops and sells a raft of generic, brand and biosimilar products — last year in May swallowed Impax Laboratories gaining access to its life-saving allergy shot Adrenaclick. Days later, the FDA said the product, along with Mylan’s $MYL EpiPen, were experiencing shortages. As of June 2019, Mylan and Amneal continue to face supply constraints, according to the health regulator.
On Wednesday, Amneal said it was planning to reorganize itself in an effort to save the company $50 million annually: by cutting its operating budget, realigning its manufacturing and R&D operations and seizing limited-competition opportunities.
Competition on its key generic products, such as Adrenaclick, and delays in key product approvals and launches including the generic NuvaRing, have compelled Amneal to slash its adjusted earnings before interest, tax, depreciation and amortization for 2019 to a range of $425 million to $475 million, from a range of $600 million – $650 million it had forecast in May. The company’s shares $AMRX tumbled about 19.4% to $5.49 before the bell.
In its first-quarter earnings conference call, Amneal chief Robert Stewart indicated that the company was seeing improvements in Adrenaclick’s supply chain.
“(W)e’re building inventory in advance of the season, the anticipated season in second and third quarter. Right now, touch wood, I like what I’m seeing and I think that we will have additional inventory this year compared to what we were struggling with throughout the course of last year,” he said.
Mylan’s EpiPen, which at its peak generated blockbuster sales, invited a storm of criticism in 2016 after pricing a pair for more $600, up from the from $100 in 2007, when it acquired the product. Under siege, the company eventually started selling its own generic version at a 50% discount. Meanwhile, the first EpiPen generic from another manufacturer was approved last year and is sold by Teva. Amneal and Kaleo’s versions, while similar, are not interchangeable with EpiPen.
“We see that Teva is essentially taking market share from EpiPen, which you would expect, but Adrenaclick is still, I think, positioned well in the marketplace and I think we expect this to be actually a growth driver in 2019 versus 2018,” Amneal’s Stewart assured analysts in May.
Amneal reports its second quarter results on August 8.
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