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GRAPHIC-Mylan stock boost follows long share struggles for company, generics industry

Lewis Krauskopf

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NEW YORK, July 29 (Reuters) - Shares of Mylan NV surged on Monday after the generic drugmaker agreed to combine with Pfizer Inc's off-patent branded drugs business. But in the bigger picture, the surge is lost in a bleaker landscape for Mylan's stock price and the broader generic drug industry since 2015.

Mylan shares have been in decline for the past four years, after topping $76 in April 2015, according to Refinitiv data. On Monday, the shares closed at $20.78, a more-than 70% decline from that 2015 peak.

This year alone, Mylan shares had lost one-third of their value through Friday, before news broke of the Pfizer tie-up.

Mylan is far from alone when it comes to share price swoons for generic drugmakers, which broadly have seen severe declines over the past several years.

"You have seen very challenging valuations for these companies and I think Pfizer sees that as an opportunity, said Kevin Kedra, an analyst with G. Research. "Mylan is essentially issuing them stock at a depressed level."

U.S.-traded shares of Israel-based Teva Pharmaceutical Industries have tumbled nearly 90% since peaking four years ago. Teva sought to buy Mylan in the summer of 2015, but Mylan successfully resisted Teva's unsolicited bid.

Shares of other makers of generic drugs, such as Perrigo Co Plc, Amneal Pharmaceuticals Inc and Endo International Plc, have also skidded.

Their struggles since the start of 2015 contrasts with a climb of more than 45% for the overall S&P 500 as well as with a more modest 11% gain for the NYSE Arca Pharmaceutical index of U.S. and European drug stocks.

While the companies each have their specific issues, a main culprit afflicting the industry broadly has been pricing pressure in the United States, partly due to buyers having gained more negotiating power, analysts said.

Generic drug revenue in North America has declined about 50% in roughly the past four years, predominantly driven by pricing declines, according to Soo Romanoff, an analyst at Morningstar.

Earnings for many generic drug companies have stagnated or struggled as their share prices have fallen over the past four years.

Many companies have also faced regulatory and legal uncertainty, analysts said, including lawsuits related to the U.S. opioid abuse epidemic and to alleged price-fixing for generic drugs.

At the same time, high leverage also hurt the outlook for the companies, including from debt related to acquisitions as the sector consolidated.

"It kind of created this storm where they couldnt issue equity to reduce their leverage," Kedra said. "All of a sudden, these companies were in declining businesses with high leverage and Wall Street is breathing down their neck.

(Reporting by Lewis Krauskopf Editing by Bill Berkrot)