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Mayne Pharma share price on watch ahead of AGM update

Kenneth Hall
Pharmacy medications

Mayne Pharma Group Ltd (ASX: MYX) share price is on watch this morning ahead of the company’s annual general meeting (AGM).

What could move the Mayne Pharma share price?

Mayne Pharma provided an update on its FY20 trading performance so far.

The US generic pharmaceuticals market “continues to have challenging dynamics”, according to CEO Scott Richards.

Aggressive contracting behaviour from three major buying groups that control 90% of retail generic drug purchasing are behind the market headwinds.

Mr. Richards said price deflation and volume has been evident in the market since it peaked in 2016.

The Mayne Pharma share price will be one to watch, given the softer conditions forecast for the short to mid-term as it looks to move away from the generics sector.

The company’s focus is on rebalancing its portfolio to better protect and grow sustainable revenue and profit streams.

What about Mayne Pharma’s revenues?

Group revenue for the four months in FY20 is down 16% from last year to $153 million. Mayne Pharma reported lower gross margin due to a changed sales mix and inventory obsolescence from generics. 

Generics Production Division revenue growth was down 26% on the prior corresponding period (pcp) but flat on the first four months of 2019.

The realignment of the business is expected to provide a boost with Mayne Pharma’s women’s health portfolio growing 50% on pcp.

The company’s Metrics Contract Services grew revenue by 16% on pcp to $26 million.

Mayne Pharma is bullish on its new E4/DRSP oral contraceptive product after announcing a deal with Mithra Pharmaceuticals in the United States.

Investors will be hoping to see a boost for the Mayne Pharma share price in 2021 when sales of the new product are expected to begin.

What about Mayne Pharma’s outlook?

Volatility in results has been a factor in recent years due to FDA approvals, competitor launches and withdrawals of key products.

Mayne Pharma therefore declined to provide earnings guidance for FY20 for those reasons.

Mr. Richards noted the company’s strong generics pipeline and the focus on growing its women’s health portfolio into 2020.

The Mayne Pharma share price will be worth watching this morning given the headwinds cited by management today.

The post Mayne Pharma share price on watch ahead of AGM update appeared first on Motley Fool Australia.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019