Teva Sees U.S. Health Law as `Opportunity;' Quarterly Profit Advances 31%
Teva Pharmaceutical Industries Ltd., the world’s biggest maker of generic drugs, sees opportunity in the U.S. health-care overhaul as more people gain insurance coverage in the company’s biggest market.
“We’re going to see 35 to 40 million people with medical coverage that were outside the circle,” Chief Financial Officer Eyal Desheh said in a telephone interview today. “That creates a very large opportunity that will take time to unfold. It’s not going to happen tomorrow.”
Teva doesn’t anticipate significant expenses because of the law, Desheh said. Rising U.S. sales helped drive a 31 percent increase in first-quarter profit, the Petah Tikva, Israel-based company said in a statement today. More prescriptions of the top-selling multiple sclerosis treatment Copaxone boosted results.
Generic sales in the U.S. helped Teva exceed analyst estimates with its earnings, Marc Goodman, an analyst at UBS AG in New York, said in a note to clients. Still, the company is trying to cut its dependence on the country. Teva agreed in March to pay 3.63 billion euros ($5 billion) for Ratiopharm GmbH in Germany, the world’s second-biggest market for generic medicines.
Earnings excluding costs linked to acquisitions including the Ratiopharm deal climbed to $830 million, or 91 cents a share, from $634 million, or 71 cents, Teva said today. Earnings beat the average estimate of 89 cents a share from 15 analysts surveyed by Bloomberg.
Sales of Copaxone, a proprietary medicine that may face competition as early as this year from Novartis AG’s multiple sclerosis pill Gilenia, rose 28 percent to $796 million.
“Copaxone had a very strong quarter,” said Aviran Revivo, a Tel Aviv-based analyst for Clal Finance. “I don’t think we’re going to see it so strong in the next quarters.” He has an “outperform” rating on Teva shares.
Teva rose 1.80 shekel, or 0.8 percent, to close at 224.60 shekels in Tel Aviv trading. Before today, the stock had returned 22 percent this year including reinvested dividends, compared with a 31 percent return for the Bloomberg World Pharmaceutical Index.
Teva’s revenue rose 16 percent to $3.65 billion. U.S. sales advanced 20 percent to $2.31 billion, accounting for 63 percent of total sales, as the company began selling a copy of Mirapex, the Parkinson’s therapy developed by German drugmaker Boehringer Ingelheim GmbH.
The impact of the U.S. overhaul was already reflected in Teva’s profit forecast for 2010, Chief Executive Officer Shlomo Yanai said on a conference call with analysts today. He reiterated that Teva expects earnings of $4.40 to $4.60 a share for 2010. This year’s forecast doesn’t include Ratiopharm, Yanai said.
Teva doesn’t expect a significant impact on earnings this year from a jury verdict won by Pfizer Inc.’s Wyeth unit and Altana AG on the validity of the patent for their heartburn drug Protonix, Desheh said. The verdict doesn’t change Teva’s appetite for risk, he said.
The Ratiopharm acquisition was Teva’s biggest since buying Barr Pharmaceuticals Inc. for $7.4 billion in 2008. The company is already seeking its next targets, Desheh said.
“We’re looking all the time,” he said. “But that doesn’t mean tomorrow.”
Teva’s reported profit doesn’t meet generally accepted accounting principles. On a net income basis, the company earned $713 million, or 79 cents a share, up from $451 million, or 51 cents, in the year-ago period.