The Mayne Pharma Group Ltd (ASX: MYX) share price will be on watch on Friday after the release of the pharmaceutical company's half year results.
Here is a summary of how the company performed in the first half compared to the prior corresponding period:
- Revenue increased 13% to $274.4 million.
- Underlying EBITDA rose 16% to $81.2 million.
- Underlying net profit after tax up 35% to $21.2 million.
- Reported net profit after tax of $2.6 million.
- Net operating cash flow increased 11% to $53.5 million.
What were the drivers of the result?
Mayne Pharma's Specialty Brands Division posted a 213% increase in sales to $43.3 million and a 227% lift in gross profit to $37.8 million. This was driven by strong sales growth of its Fabior, Sorilux, and Doryx products. The expansion of its dermatology sales team and additional marketing investments. On a normalised basis segment sales were up 53%.
The company's key Generic Products Division posted a 3% decline in sales to $175.9 million but a 58% increase in gross profit to $100.3 million. Management revealed that the key drivers of its improved gross profit were the launch of liothyronine, the acquisition of fluorouracil, and normalised stock obsolescence. This offset weak Dofetilide sales after the approval of a number of competing products.
The Metrics Contract Services segment delivered a 14% increase in sales to $33.9 million and a 4% lift in gross profit to $16.5 million. This segment has benefited from investments at its Greenville site which have transformed manufacturing capacity and capability. In addition to this, the company added two new commercial manufacturing clients during the half.
Finally, the company's Mayne Pharma International segment achieved sales growth of 13% to $21.3 million and gross profit growth of 17% to $5.8 million. This was driven by growth in key products including Monurol and Urorec.
Outlook.
Management advised that its Generic Products Division is currently "facing emerging near-term competitive pressures on some key products as well as potential opportunities from market supply disruptions."
In light of this, it continues to transition its business towards more resilient therapeutic areas that are channel focused to create a sustainable multi-source business over the longer term.
Things look a bit for positive for the Specialty Brands Division. The recent brand launches of Lexette and Tolsura are expected to be key drivers of strong growth for the segment. As are a pipeline of products pending at the FDA which include several potential first-to-market opportunities.
Should you invest?
Overall, I thought this was a reasonably solid underlying result from Mayne Pharma. But it is hard to know how the market will react due to management warning about near term competitive pressures for key generic drugs.
For now, Mayne Pharma is going to remain on my watchlist and I'll focus on other options in the industry such as CSL Limited (ASX: CSL) and even Telix Pharmaceuticals Ltd (ASX: TLX).
