One of the worst performers on the All Ordinaries index over the last 30 days has been the Mayne Pharma Group Ltd (ASX: MYX) share price.
During this time the pharmaceutical company's shares have fallen a disappointing 22%.
This latest series of declines means that its shares are now down by over 50% since this time last year and hit a multi-year low of 43 cents on Tuesday.
Why is the Mayne Pharma share price at a multi-year low?
Investors have been selling Mayne Pharma's shares this year after a poor showing in FY 2019 and a disappointing start to the new financial year.
In FY 2019 Mayne Pharma reported a 1% decline in revenue to $525.2 million and a 4% drop in reported EBITDA to $111.6 million.
On the bottom line, the company recorded a reported net loss after tax of $280.8 million. This was due largely to a non-cash pre-tax charge of $351.7 million relating to its intangible generic assets. It follows similar impairments that were made by its US generic peers.
Management was expecting a stronger performance in FY 2020, but this now looks unlikely following its annual general meeting update.
At the event the company's CEO, Scott Richards., warned that the U.S. generic pharmaceuticals market "continues to have challenging dynamics."
This is because of sustained pressure on pricing due to aggressive contracting behaviour from three major buying groups. Combined, these buyers control an estimated 90% of retail generic drug purchasing.
As a result, during the first four months of FY 2020 Mayne Pharma's revenue is down 16% to $153 million.
Its profits look likely to fall at an even quicker rate after management revealed that its gross margins had weakened. This was due to a changed sales mix and inventory obsolescence from generics.
Should you buy the dip?
Whilst its shares are arguably oversold now, I wouldn't be a buyer until trading conditions improve.
Until then, I suspect that its earnings may continue to go backwards and could weigh heavily on its shares.
In the meantime, I would sooner buy healthcare shares such as CSL Limited (ASX: CSL) or ResMed Inc. (ASX: RMD) instead.
