If Pfizer Wants Mylan, It'll Get a Can of Worms As Well

Last Updated Apr 5, 2010 4:39 PM EDT

Pfizer (PFE) may want to think carefully before acquiring generics maker Mylan (MYL), as the company has a number of problems that won't be easily sorted out. Mylan's stock is still up around $23 on rumors that Pfizer is considering acquiring the company; Pfizer just lost a bidding war for German generics maker Ratiopharm, so investors are speculating that Mylan may now fit the bill.

Any potential acquirer may want to get to the bottom of what happened last year when Mylan launched a witch-hunt to find out which insider leaked damaging safety reports to the local newspaper. The FDA ultimately cleared Mylan, but around the same time the CFO left suddenly and without explanation.

That followed a controversy around whether West Virginia University had faked MBA credentials for Mylan president Heather Bresch. (The scandal even has its own Wikipedia page.) Those events led one Wall Street analyst to ask "What is going on inside the company?" There has been no decent explanation.

On top of this, some staff at Mylan's Dey Pharma unit, which makes the EpiPen auto-injector for life-threatening allergic reactions, appear to be extremely unhappy. One hesitates to draw attention to rumors on CafePharma, but even by the standards of that gossipy web site there's a lot of griping among Dey staff. You can read pharmaceutical sales reps' complaints about the controversial way their commissions are calculated here, and you can learn about an "incident" that followed an alleged five-hour open bar at a Dey meeting here.

Having said all that, the Dey-Mylan discontent may become moot very soon. A generic competitor to the EpiPen was recently approved -- Sciele Pharma's Adrenaclick -- and it will decimate the Dey franchise. That will require layoffs of some or all of the EpiPen sales force. Sanofi-Aventis (SNY)'s also signed a licensing agreement with Intelliject, another potential rival.*

Doubtless this topic was discussed at a recent meeting of Dey management at the New Jersey Shore.

* The status of Intelliject was incorrectly stated in the original version of this item. Apologies for the error. Related: