The small-cap player in the U.S. generics market had strong revenue and growth over the past few years, which "was driven in large part by strategic price increaseas, and the acquisition of Kremers Urban Pharmaceuticals," Gilbert noted.
Lannett has a good sized generic drug pipeline to foster more growth, but in the United States, the tailwind from price growth has slowed and competitive pressures have intensified.
Lannett has a higher product concentration than its peers. Levothyroxine and Ursodiol "account for approximately one-third of sales and a higher portion of profits," Gilbert stated. While Levothyroxine has a pretty strong hold on its market, Ursodiol could face greater competition from generics at any time. The lack of geographic diversity also negatively impacts Lannett's drug portfolio.
In Gilbert's view, rising competition in the generics market will muffle any positive growth Lannett is able to muster.
At time of writing, Lannett was down 0.80 percent on the day at $23.56.
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