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No. of Recommendations: 10
Hi fools,

as I am long on IVAX I used the christmas time for some analysis and made
an comparison with some of IVAX competition with about same revenues.
(MYLAN Labs MYL and Barr Laboratories BRL)

Here is the result of my 2 cents

The Numbers
Income Statement / Cash Flow         IVAX           MYL        BRL
Data for TTM September 2003

Revenues 1203,7 1174,8 1094,1
Gross Profit 560,7 652,6 493,2
Gross Margin 46,6% 55,6% 45,1%

Net Earnings 139,8 275,5 187,2
Net Margins 11,6% 23,5% 17,1%

Operating CF 177,2 382,6 196,1
CAPEX -93,4 -12,3 -61,4
Free CF 83,9 370,3 134,6
FCF Margin (Cash King Margin) 7% 32% 12,3%


Balance Sheet IVAX MYL BRL

Inventories 291,9 196,3 116,1
Account receivables 208,2 180,6 99,9
Account Payable 88,9 35,5 64,9

Current Assets 820,5 1179,2 632,6
Cash & Cash Equivalents 140,2 215,3 355,5
Marketable Securities 25,7 467,5 5,0
Current Liabilities 365,9 198,3 145,7
Short Term Debt 28,5 0,0 5,0
Flow Ratio 1,94 4,86 1,97

Cash & Short Term Investm. 165,9 682,8 360,5
Long Term Debt 893,7 21,2 41,9
Shareholder Equity 617,5 1469,1 713,1


Some Multiples IVAX MYL BRL

Number of shares (mio) 194,6 125,4 194,6
Stockprice ( 1/2/03) 12,14 35,49 12,14
Market Cap ($ mio) 2.362,4 4.450,4 2.362,4
Earnings (TTM) 139,8 275,5 187,2
EPS ( TTM) 0,72 2,20 0,96
P/E 16,90 16,15 12,62

FCF (TTM) 83,88 370,33 134,63
FCF/Share 0,43 2,95 0,69
P/FCF 28,16 12,02 17,55

Sales 1203,69 1174,80 1094,08
Sales / Share 6,19 9,37 5,62
P/Sales 1,96 3,79 2,16

Barra´s Small Cap 600 Mid Cap 400
P/E 17,37 18,99
P/FCF 15,60 10,76
P/Sales 0,81 0,96

A short analysis

Income Statement / Cash Flow

Ivax´s Gross Margin of 46% is not bad, but
- MYL is far better
- IVX gross margin declined from 48% and 52% in 2000 and 2001, respectively
- BRL gross margin comes from 32 % and 36% in 2000 and 2001, respectively
So IVAX is the only one with shrinking margins.
The reason is the decline in revenues from paclitaxel and the declining in
it´s pricing.

Ivax Net Marging tells therefore the same declining story (2000 16% / 2001 20%)
- MYL Net Margin is increasing (2000 5% / 2001 22%)
- BRL Net Margin is increasing (2000 10% / 2001 15%)

IVAX Cash King Margin is the poorest; MYL has constant high CK-Margins about 30%,
BRL has CK-Margins of 12-20%.


Balance Sheet

- Ivax has very high long term debts which is constantly paid back but with the recent
amounts, there is a long way to go for IVX. No problems of this kind for MYL and BRL.
- The numbers for Cash & Short term investments shows another weakness of IVX. BRl has
the 2 times, MYL has 4 times the amount of IVX !
- The Flow ratio is not good for any of these companies.

There are no other extraordinary items or trends in the balance sheets.

Valuation

I computed some ratios and compared it with BARRAS Small Cap 600 and Mid Cap 400.

- You see, that IVAX is not cheap in P/E terms. This could be the result maybe from hopes
that paclitaxes sales will rebound. Not a good bet, I think. MYL here has comparable
multiples with much better numbers. All competitors are o.k. compared to Barras P/E´s.
- In terms of P/FCF Ivax is very pricy compared to the index and the competitors. Here again
MYL is the best of the crowd.
- Looking at P/Sales IVX can is the first time better.

My multiple of choice here is P/FCF.


Conclusio

I think that MYL is the best company in the comparison. A good margin situation, no debt,
constant FCF and reasonable multiples are the points scoring for MYL. IVX cannot compete in
its recent situation and I see no reason to invest in the 3rd best company . BRL is
better than IVX but I think has not the strenght and stability of MYL.

I consider to chance my investment from IVX to MYL. But I want to stay invested in the
generic drug industry as I think it will be a winner of the future trends. But this is
a new discussion.

thanx for reading,
uffnik
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