Impairment charge harms Mylan

LONDON (ShareCast) - Shares in Mylan slumped Friday after the generic drugs maker saw first quarter losses increase massively, thanks to a $385m impairment loss on goodwill.

The company’s net loss widened to $443.9m in the first quarter of 2008 from a loss of $0.07m a year earlier, on revenues that rose from $483.7m to $1.06bn. The revenue figure was around $63m lower than analysts had been expecting.

The goodwill impairment charge was taken because of the accounting requirement to assess the fair value of the company’s Specialty Segment. The company is considering selling Dey LP, its specialty pharmaceutical arm focused on the development, manufacturing and marketing of prescription drug products for the treatment of respiratory diseases, respiratory-related allergies, and emergency care medicine.

The company said it has made “excellent progress” on the integration of the Merck Generics business, which it bought in 2007 for $6.9bn.

“We continue to implement our synergies and other activities which enable us to leverage the power of our core global generics platform," said Mylan vice-chairman and chief executive officer Robert Coury.

Mylan experienced a fall in North American revenues to $392.1m compared to $407.9m a year earlier, as the company had to cut prices to head off competition from other generic drugs manufacturers. The company also experienced a decline in orders as customers undertook to reduce stock levels.

The company said outlook for the US business remains strong, however, while its Europea, Middle East and Asian region “is performing extremely well”.