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HITECH PARADE MONTHLY
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Today, Mylan is a pharmaceutical giant with 35,000-strong workforce in 165 countries worldwide. Its main product EpiPen (epinephrine autoinjector) is almost daily discussed in papers, on TV and in the web. Heather Bresch, Mylan’s CEO, was for several years in a row named one of Fortune Magazine's "50 Most Powerful Women In Business". Mylan’s NASDAQ share price jumped from $21 in 2011 up to $56 in 2015. How does company managed to skyrocket? Whether its techniques were always fair? The company was found in 1961 in West Virginia. It was named Milan after one of the establishers Milan “Mike” Puskar. The second establisher Don Panoz became the first president. In 1965, the company moved nearby to Morgantown and started manufacturing generic pharmaceuticals. The next year was a really crucial for them. Thanks to the approval of Food and Drug Association (FDA) the company was able to start Penicillin G production. Furthermore, its whole product line was expanded in order to include such medicines as analgesics, tranquilizers and diuretics. These drugs were shipped to drug stores, companies and other medicine providers. All of them were reselling Milan's production using their own labels. In 1972 the name of the company altered to Mylan. In 1973, Mylan had its initial public offering becoming a publicly traded company. Today its MYL shares can be bought at NASDAQ and TASE. Puskar left the company in 1973 because of financial difficulties, but in 1976 its new chairman Roy McKnight persuaded Puskar to come back and he stayed in the team until 2009. By 1980, Mylan was producing five out of ten most popular generic antibiotic medicines. There was a formidable sales growth after Hatch-Waxman Act was passed in 1984. In a year and a half after its passage Mylan's earnings increased by 166%. In 1989, because of Mylan's investigation of the industry (that reveals a chunk of corruption and dishonesty of Mylan's rivals), FDA changed the way generic drugs were reviewed. New precautions provided consumers with more safe production. After 2002, the company started to acquire very actively pharmaceutical enterprises worldwide. In 2007, two crucial acquisitions were made. Mylan acquired a controlling interest in Matrix Laboratories that controlled facilities in India and China and had a good marketing potential in Africa and Western Europe. Purchasing the right to market the EpiPen from Merck KGaA occurred a really key decision that was a basis of Mylan’s progress in the next years. Today, EpiPen sales provide 40% of Mylan’s operating profits. EpiPens are hand-held devices carried by those who have severe allergies. Epinephrine solution should be injected into the thigh muscle as soon as possible, if allergy stroke is suspected. In 70% of episodes a second dose is not needed. In 2009, EpiPens were modernized by Mylan researchers. In 2009, a price of two EpiPens was about $100, but it has increased by 6 times for 7 years and went over $600 in 2016. Heather Bresch, who headed Mylan in 2012, successfully lobbied U.S. Congress to generate legislation making EpiPens available in schools and include them in a medical package of first aid along with defibrillators. Mylan also influenced FDA to broaden possible risks of allergy attacks and their consequences, making EpiPen even more desirable product for patients. Now Mylan has 85% market dominance in EpiPen sphere in U.S., which is very close to monopoly. For three last years Bresch is harshly criticized for the EpiPen prices. In response to this criticism, Mylan made a "classic PR move" gesture providing larger financial assistance to poorer people. Saving cards, proposed via rebate program, can be used by a small number of patients who need the drug, and no one on Medicaid. In September 2016, Krevitt and Wallace, Silicon Valley engineers, performed EpiPen teardown analysis and calculated that a cost of the three liquid ingredients - epinephrine, sodium metabisulfite and sodium chloride - equalled $2.02 for both pens, total producing and packaging costs were about $10 for a two-pack. In case of mass manufacturing these costs could be even lower. Lauren Kashtan, Mylan’s spokeswoman, tried to argue that the EpiPen is a "complex prescription product," implying it was not something that any do-it-yourselfer can make in his garage, but her plea looked rather flimsy. [89]. It seems that future historians will dispart the 55-year history of Mylan into two epochs. "Epoch of Piskar" will be regarded as the graceful period of initial growth from small to quite formidable manufacturer with solid reputation. "Epoch of Bresch" is not yet finalized, but so many business ethics violations were already noticed that any current MYL shareholder should ponder seriously whether it is advisable to keep Mylan’s shares from now on. November 26th, 2016
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