Lannett (AMEX:LCI): A Generic Drug Value Stock

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LCI has received 22 FDA product approvals since 2005, with 16 additional ANDAs pending at the Agency and 50 products at various stages of development. Through the first half (six months) of FY-10, LCI has posted revenue of $60.2 million versus $54.8 million in the year-ago period, resulting in net income during this period of $2.9 million versus $2.8 million in the year-ago period.  LCI has $20.4 million in cash / equivalents, over $40 million in working capital, and long-term debt of $7.9 million.

Looking ahead, LCI is expanding its facilities (including facilities acquired with Cody Labs) and has provided guidance for product submission in 2011 for two Paragraph IV patent challenges. In addition, the fundamentals for the global generic drug industry point to continued growth, including those outlined below.

1.) approximately 70% of all prescriptions in the U.S. are filled with generic drugs;

2.) IMS Health estimates $135 billion in branded drug sales (including $90 billion in U.S.) will face generic competition / patent expiration over next five years (including blockbusters such as Lipitor and Plavix);

3.) IMS Health estimates $42 billion in global generic drug sales in 2011, representing growth from an expected $28 billion in global sales in 2009 and $17 billion in 2008; and

4.) IMS Health estimates that the generic drug industry is growing at 7.8%, which is a faster pace than the worldwide market for pharmaceuticals.

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Disclosure: Long LCI