How business, doctors and journalists prey on your food anxieties I

Mylan Laboratories
Making tablets in
Mcrgantown . W .Va .
Seventy-nine
pills, three
processes .
nance it has . In its last fiscal year,
which ended Mar. 31, Mylan posted
net earnings of $121 million on just
S396 million in revenues . That figure
is puny next to Merck's $15 billion .
But if you count prescriptions dispensed,
Mylan is second only to
American Home Products .
Mvlan's nominal headquarters is in
Pittsburgh, but you'Il find Puskar's
custom-built convertible parked outside
tI3eMorgantowil, W.Va . manufacturing
plant . This is where he
hangs out, in simple digs . Here is the
key to Mylan's huge profitability<strong>and</strong>
to the inability of his big, highcost
competitors to compete against
him . "The key to our success is that
we don't waste monev ." savs Puskar .
MYlan uses just three manufacturing
processes for a1179 of its products .
That holds costs down <strong>and</strong> enables
the company to meet any order wi thin
five davs .
In the generics <strong>business</strong>, being the
first to market is a big deal . The first
generic to steal <strong>business</strong> from a br<strong>and</strong>ed
drug as the latter's patent expires is
usually introduced at 70% of the price
of the br<strong>and</strong> . Later, as many as 12
generics will evenntallv enter the mar
ket, driving the price down each time
until it settles at as little as 10% of the
br<strong>and</strong> price . The first comer reaps
huge profits at 70% of the old price ;
the latecomers get meager crumbs .
In 1994 four of Mylan's six generic
introductions were first to market .
One of those firsts was ulcer drug
cimeridine, known to customers of
inventor SmithRline Beecham under
92
the name Tagamet . Mylan began selling
cimetidine the ten, day Tagamet's
patent expired in Maa . But it re~-ved
up for the introduction five vears earlier
. "We plan wav ahead," savs Puskar
. "If you rush, rhings will end up
costing you more ."
There was only one supplier of
cimeddine in the world, a Hungarian
company, Lek . Even before it got
Food & Drug Administration approeal
for cimetidine, .biylan contracted
with Lek to purchase most of
its cimetidine supplv . When Du Pont-
Merck <strong>and</strong> Teaa Pharmaccutical Industries
tried to compete, they
couldn't get enough cimetidine . BV
May of 1995, Mylan was l<strong>and</strong>ing 39".%
of new cimetidine prescriptions, with
Tagamet itself down to 14%, according
to market researcher axts America .
The generic drug industny has always
struggled with image problems,
whether deserved or nor . Lawsuits
pendingagain .st Copley Pharmaceutical
blame the company-perhaps
wrongly-for as manp as 100 deaths
from a generic version of the astlvna
drug albuterol . In 1989 a bribety
sc<strong>and</strong>al erupted at the generic drug
division of the FDa .
In this tarnished <strong>business</strong>, Puskar is
shining clean . He was the whistleblosver
in the briben' case . He is a
manufacturing perfectionist . The
company has neeer received a warning
letter fiom the FDa . Mylan's reputation
for high quality enables it to
charge 5% to 10% more than competing
discounters . Pharmacists say that
they never find smashed pills at the
bottom of a Mylan bottle .
Mylan's quality reputation <strong>and</strong>
broad product line attracted Eli Lilly
when it began looking for a generic
partner . "Our managed care customers
want generics, but we recognized
it was a very different <strong>business</strong> <strong>and</strong>
that we would probabl ' ~ not be very
good at it," says Mitchell Daniels,
p resident ofNorth Aune rican pharmaceutical
operations at Lilly . _
Lillv came to Puskar saith a deal
that, in effect, has Lilly helping to
undercut its avn sales . It now manufactures
its antibiotic cefaclor <strong>and</strong>
painkiller propoxvphene for Mvlan to
sell at lower prices under the Mvlan
label while Lilly still sells the drugs as
Ceclor <strong>and</strong> Darvon . Lilly's apparent
reasoning : Someone is going to copycar
these drugs, so it might as well be
Mylan <strong>and</strong> we might as well capture at
least a little of rhe manufacturing
profit .
Mranwhile, Puskar is inching into
the br<strong>and</strong>ed drug market b% filling
niches too small to interest the big
drugmakers . He has licensed compounds
that lie hopes to develop into
patented drugs for migraine, rertigo
<strong>and</strong> 'ourns . Mylan alreadv has two
patented drugs on the market toda~ .
One is hlaszide, an untih`pertensive
drug developed as a knockoff. The
pill's absorption bldte bodr so exceeded
that of the b r<strong>and</strong>ed drug it was
meant to imitate that Maxzide merited
its ov, n patent .
Now vou know vt-hy Milan Puskar
wasn't worried about competing with
Merck. 111111111
c
2046673350 F°rb 5 . .aug ust 11,1995
http://legacy.library.ucsf.edu/tid/agf97d00/pdf