Corner of Berkshire & Fairfax Message Board

General Category => Investment Ideas => Topic started by: Zorrofan on April 21, 2015, 07:11:09 AM

Title: MYL - Mylan
Post by: Zorrofan on April 21, 2015, 07:11:09 AM
TEVA made a bid today for $82 per share cash & stock, MYL is only around $73.40 to $74 in heavy volume......could this be an arb opportunity?  Between Teva bidding for Mylan and Mylan bidding for Perrigo this could be interesting!!

cheers
Zorro
Title: Re: MYL - Mylan
Post by: rpadebet on April 21, 2015, 08:15:11 AM
I think Perrigo gets taken over one way or another..
VRX - I am looking at you. Perrigo is in your zone
Title: Re: MYL - Mylan
Post by: Zorrofan on April 28, 2015, 08:26:47 AM
I confess to being somewhat surprised by this.....TEVA has a bid of $82 for MYL and rumor has it TEVA is willing to raise the bid to make this deal happen.  Yet MYL continues to trade well below the offer......any thoughts??

cheers
Zorro
Title: Re: MYL - Mylan
Post by: Liberty on April 28, 2015, 08:33:38 AM
Read this:

http://www.mylan.com/news/press-releases/item?id=123304
Title: Re: MYL - Mylan
Post by: Zorrofan on April 28, 2015, 08:40:49 AM
Oh i know, but TEVA is meeting with key shareholders to see what price they would need to make this happen. Plus MYL has bandied about a $100+ number before they would be interested. I think TEVA comes back with a higher bid and a larger cash component.....

cheers
Zorro
Title: Re: MYL - Mylan
Post by: giofranchi on September 11, 2015, 06:45:39 AM
Why Wall Street loves to hate Mylan's CEO

http://fortune.com/2015/09/11/mylan-ceo-heather-bresch/?xid=soc_socialflow_twitter_FORTUNE

Cheers,

Gio
Title: Re: MYL - Mylan
Post by: giofranchi on September 18, 2015, 01:37:25 AM
Mylan NV Presents at Morgan Stanley Healthcare Brokers Conference (Transcript)

http://seekingalpha.com/article/3518926-mylan-nv-presents-at-morgan-stanley-healthcare-brokers-conference-transcript

Cheers,

Gio
Title: Re: MYL - Mylan
Post by: giofranchi on October 15, 2015, 03:00:48 AM
Mylan CEO Heather Bresch: We needed tax inversion in order to grow

http://fortune.com/2015/10/14/mylan-ceo-heather-bresch-most-powerful-women-summit/?xid=soc_socialflow_twitter_FORTUNE

Cheers,

Gio
Title: Re: MYL - Mylan
Post by: aceskc on October 21, 2016, 10:46:23 AM
Hey guys,

Wanted to bring this thread alive again.

MYL seems quite cheap now  (expected to do ~$4.85 Adj eps in FY16, ~$6 in FY18) with much lower contribution in the future from the national scandal that is Epipen. However, going through the 10k & press documents I noticed that all their Capex guidance & Adjusted FCF excludes the line item "Payment for product rights and other which amounted to $507M in FY15 & is roughly inline this year.  The only explanation i found in the 10k was "Product rights and licenses are primarily comprised of the products marketed at the time of acquisition"  . A quick email to IR also got a similar response : "The line you referenced pertains to product rights and licenses for products acquired and or licensed from others."

The question i have is how should we think of this as an expense? Is this a growth Capex expenditure, or is this a continual licensing requirement for the business to sell its products on an ongoing basis- if so should be considered part of Maintenance Capex and discounted from reported earnings. Thoughts?"
Title: Re: MYL - Mylan
Post by: aceskc on October 24, 2016, 09:00:00 AM
Thoughts anyone?
Title: Re: MYL - Mylan
Post by: Schwab711 on October 24, 2016, 10:28:19 AM
I can't really add much company-specific detail since I haven't ready Mylan's reports, but I can give a little background from a general POV.

The largest pharma companies can be thought of as like Unilever or Coca-Cola and McKesson/Cardinal as the grocers (this is not a perfect example, but it should work for this post). Like Unilever/KO, pharma companies have a lot of branded products that are in demand, thus they have a strong relationship with the distributors (which is like shelf-space at a grocer). Hospitals/pharmacies can only have so much inventory, so they are at times reliant on McKesson/Cardinal to provide in-demand products to stock. Mylan (and all the other large pharmas) use this strong relationship with the distributors (the top 3 distributors account for 85% market) to help small or niche pharmas gain distribution (often through licensing deals with upfront payments + milestones based on sales). Sometimes these license deals are with large int'l pharmas so each pharma can focus on their core market(s).

Mylan does some licensing deals which may require fixed/variable annual payments or one-time payments. This line item is likely those annual payments (large one-time/upfront payments should definitely be noted). The licensing deals generally (but not always) run for the life of the patent + 6 months (protected life of compound).

If this is what that line item represents, it is definitely [maintenance] CapEx. These payments are mandatory (and should be included in COGs). I'll try to answer or point you in the right direction if you have anything else.

GAAP accounting for license/rights payments:
https://www.pwc.com/us/en/health-industries/our-perspective/assets/us-gaap-issues-nov-2013.pdf

Simple overview of how to think about individual license/rights deals:
http://files.pharmadeals.net/contents/Sample_Valuation.pdf

Haven't read this yet but it's Mylan specific so may be interesting:
http://publications.ruchelaw.com/news/2015-11/Vol2no9_06_Mylan.pdf
Title: Re: MYL - Mylan
Post by: aceskc on October 24, 2016, 11:54:13 AM
Thanks Scwab711 , very helpful information. I suspected as much, since the expenditure this year, has roughly been in line with last year. No sure, why they would not include this in their capex guidance anywhere...probably why FcF trails adjusted earnings & cashflows