Mylan's price hikes have been very hard to swallow
If we could claim a regular following for this column, our loyal readers might confirm that we have more than a passing fascination with 'Big Pharma'. It makes really big news when things are going well and bigger news when the pharmaceutical world is dodgy. Our interest in the business is shared with Donald Trump, who has said that from a commercial perspective the sector often "gets away with murder".
The pharma giant we are looking at today could have been one he has in mind. It is the Netherlands-registered US group Mylan, a leader in the production of 'genetic' drugs. It employs 30,000 people (50pc in India), has a huge portfolio of drugs and 50 facilities around the world, including Ireland.
Mylan's big claim to fame in recent years is that it is the producer of that priceless treatment for asthma and severe allergies sufferers known as the EpiPen.
In the US, the EpiPen was reckoned to be such an important element in public health president Obama signed an EpiPen Law in 2013 putting the product into schools. Mylan, alas, took staggering liberties with its pricing policies. In eight years, the price rose more than five-fold. Consequently, the group was roundly condemned for 'price gouging' by its customers.
The company was also accused of misclassifying the treatment, a sort of pharmaceutical fraud, and was forced to settle a fine with the US Department of Justice to the tune of $465m (€394m). It has also been the subject of a congressional hearing over EpiPen pricing.
Mylan has interesting Irish connections. One of its founders was Don Panoz, the man who would emerge in Ireland in the 1970s with another company, Elan Pharmaceuticals. Panoz was gone from Mylan when it was developing its acquisition policy. It took over the generic division of the German-based Merck, Abbott Laboratories and an India concern, Matrix Labs. Its 2015 proposed merger with Teva, the world's biggest generic group, flopped.
Today, the group reports on North America, Europe and the rest of the world markets. The North American market is its most important, contributing 51pc - $5.6bn (€4.7bn) - to group sales.
The group fulfils one in every 13 prescriptions in the US, far more than companies like Pfizer, Merck and Sanofi. Europe is the world's second largest generic pharma market by value and accounts for 27pc ($3bn) of Mylan's total sales. It has 11 plants in Europe, including one in Ireland.
The remaining sales come mainly from India, Japan and Australia and account for $2.4bn (€2bn) of group sales.
Last year was an unsatisfactory one for Mylan as revenues were up but profits were down. Revenues rose 18pc to $11bn (€9.3bn), but operating profits fell a whopping 53pc to $700,000 (€593,000) - litigation settlements didn't help.
In the last five years its share price peaked at $78 (€66) in late 2014, today they trade at $37.33 (€31.65), just above its yearly low of $34. Its market value is $20bn (€16.9bn).
While Mylan was under fire for its relentless price increases, damaging its reputation and causing shareholder losses, astonishingly it proposed paying its former CEO a salary of $98m (€83m) as he moved upstairs to chairman.
The respected US firm Institutional Shareholder Services took a rare step of informing investors to oust all of Mylan's directors, stating the company had a record of poor stewardship and responsiveness. You cannot argue with that assessment; so give the shares a wide berth.
Nothing in this section should be taken as a recommendation, either explicit or implicit to buy any of the shares mentioned.