Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

Equity Bottom-Up

Recent news stories reporting looming criminal antitrust charges against certain generic drug companies (and possibly executives) are wighing on the shares of generic drug manufacturers. This Insight discusses US antitrust laws and penalties; certain aspects of the investigative process; and known facts about some of the products involved in the inquiry. We think that investors should wait for negative newsflow (likely coming soon) before getting involved in the stocks.

Recent news stories reporting looming criminal antitrust charges against certain generic drug companies (and possibly executives) are wighing on the shares of generic drug manufacturers. This Insight discusses US antitrust laws and penalties; certain aspects of the investigative process; and known facts about some of the products involved in the inquiry. We think that investors should wait for negative newsflow (likely coming soon) before getting involved in the stocks.  

Pharma/ Biotechnology Investments Specialist, Vasuda Capital Management

Dr. Bhavneesh Sharma, MD, MBA

Pharma/ Biotechnology Investments Specialist

Vasuda Capital Management

<a href="https://www.smartkarma.com/entities/870" target="_blank" data-smartkarma-citation="entities:870:1">Mylan Nv (MYL US)</a> stock has seen some downward pressure since 2015 after the increased capital expenditure and debt load for acquisitions pressurized some financial efficiency measures like ROIC. While the company's debt to equity ratio at present is higher than the industry average (due to recent acquisitions), current ratio and quick ratio are comparable to the industry average. About US$2.4 billion of debt is due in 2018 and the reduction of the debt, and synergies and increase sales from recent large acquisitions are expected to improve operating cash flow growth, profit margin% and ROIC in the next 3 to 4 years.We consider <a href="https://www.smartkarma.com/entities/870" target="_blank" data-smartkarma-citation="entities:870:1">Mylan Nv (MYL US)</a> common stock as undervalued at present. Our first price target by enterprise DCF method is US$46. The stock also appears undervalued by relative valuation measures like forward EV/EBITDA.

Mylan Nv (MYL US) stock has seen some downward pressure since 2015 after the increased capital expenditure and debt load for acquisitions pressurized some financial efficiency measures like ROIC. While the company's debt to equity ratio at present is higher than the industry average (due to recent acquisitions), current ratio and quick ratio are comparable to the industry average. About US$2.4 billion of debt is due in 2018 and the reduction of the debt, and synergies and increase sales from recent large acquisitions are expected to improve operating cash flow growth, profit margin% and ROIC in the next 3 to 4 years.We consider Mylan Nv (MYL US) common stock as undervalued at present. Our first price target by enterprise DCF method is US$46. The stock also appears undervalued by relative valuation measures like forward EV/EBITDA. 

Mylan N.V. (MYL US): Another Contrarian Pharmaceutical Investment

Public Relations and Social Media Manager, Dechert LLP

Peggy Heffner

Public Relations and Social Media Manager

Dechert is a global specialist law firm

Dechert LLP

Dechert is a global specialist law firm.
Focused on sectors with the greatest complexities, legal intricacies and highest regulatory demands, we excel in delivering practical commercial judgment and deep legal expertise for high-stakes matters.

Our work is widely recognized. We have 20 standout practices noted by Chambers Global, including global-wide rankings for arbitration, corporate investigations, anti-corruption, investment funds and life sciences. Named Antitrust Team of the Year, Chambers USA commends our “accomplished group” as “routinely sought after to handle some of the most significant litigation and transactions in the antitrust world.” 

In an increasingly challenging environment, clients look to us to serve them in ways that are faster, sharper and leaner without compromising excellence. We developed a first-of-its kind legal project management department, which uses technology, people and processes to drive efficiency and deliver value for our clients.

We are innovators. Dechert ranked #7 in the Financial Times’ Top North American Innovative Law Firms. Financial Times also recognizes us among the Top European Innovative Law Firms and highly commends World Compass, our marketing compliance service, which offers investment firms advice in more than 100 jurisdictions.

Event-Driven

Fast Facts<ul><li>In the first three quarters of 2016, there were 24 significant merger investigations, which is on pace to challenge the record of 37 set in CY2015. </li><li>Significant merger investigations through Q3 2016 lasted 9.7 months on average—on par with CY2015, but more than one-third longer than from 2011 to 2013. </li><li>The antitrust agencies filed three complaints in the third quarter for a total of five complaints YTD, also on pace to challenge the record level of CY2015 when seven complaints were filed.</li><li>Scheduling orders related to the complaints filed in 2016 indicate that antitrust merger litigation is taking even longer with 147 days between complaint and the start of trial and 27 days for trial, up 47% and 125%, respectively, from cases filed in CY2015.</li></ul>

 Fast FactsIn the first three quarters of 2016, there were 24 significant merger investigations, which is on pace to challenge the record of 37 set in CY2015. Significant merger investigations through Q3 2016 lasted 9.7 months on average—on par with CY2015, but more than one-third longer than from 2011 to 2013. The antitrust agencies filed three complaints in the third quarter for a total of five complaints YTD, also on pace to challenge the record level of CY2015 when seven complaints were filed.Scheduling orders related to the complaints filed in 2016 indicate that antitrust merger litigation is taking even longer with 147 days between complaint and the start of trial and 27 days for trial, up 47% and 125%, respectively, from cases filed in CY2015.

No Let Up in Antitrust Merger Investigation or the Duration of Merger Investigations

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Innovative products, strong IP, and an unmatched aesthetics franchise drive Allergan's growth outlook.<ul><li class="p1">We anticipate high-single-digit growth for Allergan through 2020 thanks to defensibility of the aesthetics business, strong intellectual property protection on most major products, and new innovative product launches, which includes pipeline opportunities to support Allergan's aesthetics, dry-eye, glaucoma, depression, and gastroenterology franchises.</li><li class="p1">Our forecasts for Allergan match consensus estimates, but we think the stock price doesn't reflect the above-average growth rate and profitability of this wide-moat firm.</li><li class="p1">Unlike lower quality specialty pharma peers, Allergan has low financial leverage, patent protection on key products well beyond 2020, and an innovative pipeline that supports future prescription growth and pricing power.</li><li class="p1">Additionally, Allergan possesses a disciplined management team and has not been overly reliant on price increases for growth, from our perspective.</li></ul>

Innovative products, strong IP, and an unmatched aesthetics franchise drive Allergan's growth outlook.We anticipate high-single-digit growth for Allergan through 2020 thanks to defensibility of the aesthetics business, strong intellectual property protection on most major products, and new innovative product launches, which includes pipeline opportunities to support Allergan's aesthetics, dry-eye, glaucoma, depression, and gastroenterology franchises.Our forecasts for Allergan match consensus estimates, but we think the stock price doesn't reflect the above-average growth rate and profitability of this wide-moat firm.Unlike lower quality specialty pharma peers, Allergan has low financial leverage, patent protection on key products well beyond 2020, and an innovative pipeline that supports future prescription growth and pricing power.Additionally, Allergan possesses a disciplined management team and has not been overly reliant on price increases for growth, from our perspective.

Allergan's Wide Moat Supports Industry-Leading Growth and Profit

Fast Facts<ul><li>Significant merger investigations lasted 9.5 months on average over the 12 months ending Q1 2016, about 20% longer than observed over the prior 12 months.</li><li>There were 33 significant merger investigations during the 12-month period ending Q1 2016, compared to 32 during the prior 12-month period.</li><li>Increased use of upfront buyers may be partially responsible for the increase in duration. In 2015, consents requiring upfront buyers took 2.1 months longer than consents requiring post-order buyers.</li></ul>

Fast FactsSignificant merger investigations lasted 9.5 months on average over the 12 months ending Q1 2016, about 20% longer than observed over the prior 12 months.There were 33 significant merger investigations during the 12-month period ending Q1 2016, compared to 32 during the prior 12-month period.Increased use of upfront buyers may be partially responsible for the increase in duration. In 2015, consents requiring upfront buyers took 2.1 months longer than consents requiring post-order buyers.

Is Use of Upfront Buyers Causing Longer Merger Investigations? Q1 2016 Update Confirms 2015 Trends

United States

Mylan NV is a global generic and specialty pharmaceuticals company. The Company operates an active pharmaceutical ingredient manufacturer and runs a specialty business focused on respiratory, allergy, and psychiatric therapies.

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Mylan NV (MYL US)

Generic Drug Antitrust Inquiry: A Primer

Recent news stories reporting looming criminal antitrust charges against certain generic drug companies (and possibly executives) are wighing on...

Kemp Dolliver, CFA

Mylan N.V. (MYL US): Another Contrarian Pharmaceutical Investment

Mylan Nv (MYL US) stock has seen some downward pressure since 2015 after the increased capital expenditure and debt load for acquisitions...

Dr. Bhavneesh Sharma, MD, MBA

No Let Up in Antitrust Merger Investigation or the Duration of Merger Investigations

Fast Facts In the first three quarters of 2016, there were 24 significant merger investigations, which is on pace to challenge the record of 37...

Dechert LLP

Allergan's Wide Moat Supports Industry-Leading Growth and Profit

Innovative products, strong IP, and an unmatched aesthetics franchise drive Allergan's growth outlook. We anticipate high-single-digit growth for...

Morningstar, Inc.

Is Use of Upfront Buyers Causing Longer Merger Investigations? Q1 2016 Update Confirms 2015 Trends

Fast Facts Significant merger investigations lasted 9.5 months on average over the 12 months ending Q1 2016, about 20% longer than observed over...

Dechert LLP

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