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Executive Summary

Mylan's Maxzide connection pushed its overall business with Lederle to 35% of Mylan's total fiscAL 1985 net sales, Mylan noted in a 10-K filing with the Securities & Exchange Commission accompanying the release of the generic firm's FY 1985 annual report. Mylan said in the 10-K that during the three years ended March 31, 1985, Lederle "accounted for 35%, 18% and 24% . . .of net sales." During the most recent fiscal year, sales to Lederle, which markets Mylan's potassium sparing/diuretic combo drug Maxzide, were roughly $18.7 mil., compared to $6.6 mil. in fiscal 1984. Maxzide was approved by FDA last October, so the total 1985 business with Lederle includes about five months of Maxzide sales. During the same three-year period, Mylan's second biggest customer was United Research Labs, which "accounted for 11% [$5.9 mil.], 14% [$5.2 mil. and] 11% [$3.5 mil.] of net sales." The firm said in the 10-K that "during each of the last three years, sales to major drug mfrs. ranged between approximately 31% to 40% of the company's total sales volume. Sales to unrelated firms who resell products under their own labels accounted for substantially all of the remainder." Referring to the impact of Maxzide on its balance sheet, the firm said in its annual report: "The introduction of Maxzide and the receipt of our new drug approval from the FDA in October is the single most important event in Mylan's history. . . After only six months on the market, Rxs are averaging 30,000 per week." While the company's 1985 sales increased a substantial 45%, from $37 mil. to $53.5 mil., its net earnings jumped 165%, from $4.7 mil. to $12.5 mil. The firm indicated that it spent $3 mil. for R&D in 1985, accounting for 5.6% of sales, in order to "insure the future stream of new generic versions of leading drugs." To prepare for what it perceives as a growing generic market, Mylan noted that it is currently expanding its Morgantown, West Virginia production facility with a 50,000 sq. ft., $1.5 mil. addition, which should be completed "early this summer."

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