* Q3 EPS ex-items 32 cents vs 27-cent Wall St view
* Sees FY adjusted EPS of $1.24-$1.28
* Shares rise 4.6 pct (Updates with investor, company comment, adds byline)
By Toni Clarke
BOSTON, Oct 29 (Reuters) - Generic drugmaker Mylan Inc (MYL.O) posted better-than-expected third-quarter results on Thursday, helped by acquisition-related cost savings.
The world’s No. 3 generic drugmaker raised its full-year outlook, and said it believes it can continue its current momentum into 2010.
Mylan’s shares rose 4.6 percent to $16.50.
The company posted a net loss of $40 million, or 13 cents per share, compared with net income of $182.4 million, or 47 cents a share, a year earlier.
Excluding an $83 million charge to settle a federal probe into Medicaid rebates, the company earned 32 cents a share — 5 cents higher than the average estimate of analysts polled by Thomson Reuters I/B/E/S.
“We view Mylan’s strong third-quarter results as a continued indication of the company’s improving underlying profitability,” said Chris Schott, an analyst at J.P. Morgan, in a research report.
Revenue fell 24 percent to $1.26 billion. Analysts had expected revenue of $1.23 billion. Last year’s figure included $455 million from its sale of rights to its blood pressure drug Bystolic. Excluding that, revenue rose 5.2 percent.
The company reported greater-than expected cost cuts, which were generated in part by staff cuts related to the integration of Merck KGaA’s (MRCG.DE) generic drug business.
The government’s determination to reform healthcare and cut costs can only benefit Mylan, said Bill Smead, chief executive of Smead Capital Management, a two-year-old firm that owns Mylan shares and has $160 million under management.
“Whatever kind of health plan is passed by Congress it will revolve around the government organizing buying groups to reduce costs,” he said. “In this environment, we think Mylan has a lot of upside.”
Mylan said it is also being helped by quality control problems at some rival companies. Indian drugmaker Ranbaxy RANB.BO, Detroit-based Caraco Pharmaceutical Laboratories Ltd CPD.A and Canadian drugmaker Apotex Inc. are among the companies that have recently had problems.
“What we are seeing that you haven’t seen before is a weighting by customers towards reliability and quality,” said Mylan President Heather Bresch, in an interview. “Customers who previously would have changed suppliers over a nickel difference in price are now realizing the cost to their business and the administrative expense of constant switching.”
Revenue in North America rose 9.2 percent to $502.5 million, helped by new product launches and increased volume.
Revenue from the region including Europe, the Middle East and Africa slipped 1.1 percent to $417.6 million.
Mylan raised its 2009 forecast for earnings excluding items to a range of $1.24 to $1.28 per share. In July, it forecast $1.13 to $1.20 per share.
Mylan’s shares rose 72 cents, or 4.6 percent, to $16.50 in afternoon trading on Nasdaq. (Reporting by Toni Clarke and Lewis Krauskopf, editing by Dave Zimmerman and Gunna Dickson)