Bad news Friday, at least for three ASX-listed companies. 7-Eleven's decision to walk away on a supply deal has left Metcash shares deep in the red while Gentrack and Mayne Pharma have disappointed investors with new profit warnings.
A big loss for generics pharmaceuticals maker Mayne Pharma in 2018-19 surprisingly produced a big gain, meanwhile listed horticulture producer and distributor Costa Group has reported a 15% drop in statutory interim profit.
The launch of new generic drugs fentora and efudex has been strong, with 40% and 30% market share respectively. Yet Credit Suisse suspects this has not been enough to offset competition and earnings decline in the first half.
The company has signed an exclusive licence and supply agreement to commercialise a combined oral contraceptive in the US for total consideration of US$295m. The product is to be launched in the second half of FY21, subject to FDA approval.
Credit Suisse reviews script volume trends for the company's key generic and specialty brands. With limited improvement in the final six weeks of FY19 the broker envisages downside risk to consensus forecasts.
The company has announced a significant deterioration in the performance of its generic products since the first half results because of increased competition and US$4m in one-off adverse items. The high-margin specialty brands revenue is also weaker than expected.
Mayne Pharma's result was a big improvement on a weak previous period but was currency-assisted and disappointed nonetheless. Specialty brands stood out in revenue terms, the broker notes, but costs were elevated for various reasons.