Mylan Inc., the biggest U.S. maker of generic drugs, is "well capitalized" and able to manage debt from last year's purchase of Merck KGaA's generics unit, Chief Executive Officer Robert J. Coury said Thursday.
While Mylan "is one of the most leveraged companies in the industry, we're not in a situation that is unmanageable," Coury told reporters in Lyon, France, at an event to mark the opening of a new plant. Mylan swapped $500 million in floating debt to fixed rates to take advantage of a decline in medium-term dollar interest, the company said in a statement.
The Canonsburg-based drugmaker has lost more than half its value in the past 12 months as investors worry how it will pay off last year's $6.7 billion purchase of Merck KGaA's generics unit. The acquisition made Mylan the world's third-largest maker of copied medicines with the scale and low manufacturing costs needed to survive in an increasingly competitive industry, executives have said.
Companies that make lower-priced versions of branded medicines may benefit from the weakening global economy, Coury said. Governments, which favor generic drugs as a way to control the rising cost of health care, may turn even more to the products to keep costs down as they divert taxpayer money to bail out banks embroiled in the credit crisis.
"There's an opportunity here," Coury said. "One of the things generics offer is that solution."
The integration of Merck Generics is going to plan, the executive said. "We're very comfortable with what we've seen."
Mylan fell 11 cents to $7.62 in trading yesterday.
Mylan has so far swapped $2 billion in floating debt to rates fixed at an average of 6.55 percent, the company said.
The interest rate swaps allow the drugmaker to lock in costs for its $4.1 billion term loan, which the company used to finance its acquisition of the Darmstadt, Germany-based Merck unit. About $850 million of the debt remains subject to Libor fluctuations, Mylan said.
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