Teva Pharmaceutical Industries Ltd. (TEVA) said generic-drug sales in the U.S., its biggest market, fell for a second straight quarter, hurt by manufacturing problems and a dearth of new products.
Sales of U.S. generics tumbled 32 percent, the Petah Tikva, Israel-based company said today in a statement. The world’s biggest maker of copycat medicines reported revenue of $4.1 billion, missing the average analyst estimate of $4.29 billion.
Chief Executive Officer Shlomo Yanai said growth will probably perk up in the second half and the drop in the U.S. should not be viewed as a trend. Teva agreed last week to buy Cephalon Inc. (CEPH) for $6.2 billion in a deal aimed at reducing reliance on the top-selling Copaxone multiple-sclerosis treatment, which accounted for 22 percent of sales last quarter.
“The results are a bit disappointing, especially when you look at the North America sales,” said Natali Gotlieb, an analyst for Israel Brokerage & Investments Ltd. in Tel Aviv. She recommends investors buy the stock. “The big story is going to be in North America.”
Teva’s earnings excluding some costs climbed to $936 million, or $1.04 a share, from $830 million, or 91 cents, a year earlier, the company said. Profit matched the average estimate of $1.04 a share from 22 analysts surveyed by Bloomberg in the past month.
‘Shift in Fortunes’
Teva’s American depositary receipts rose $1.51, or 3.2 percent, to $48.65 at 4 p.m. New York time on the Nasdaq Stock Market to give Teva a market value of about $45.7 billion.
Teva’s ADRs have shed 17 percent in the past year as investors fretted that competition would erode sales of its biggest innovative drug. The stock sold for 8.8 times estimated profit before today, making it the second-cheapest of 10 global drugmakers of similar size. Only AstraZeneca Plc (AZN) is cheaper.
“The perception of Teva changed massively over the past year, from a company which can do no wrong to one that fumbles its way,” Ronny Gal, a Sanford C. Bernstein & Co. analyst in New York, wrote in a report on May 9. Instead, the company is “a victim of a shift in industry fortunes.” Gal raised his rating on Teva shares to “outperform” from “market perform” in the report.
The company today repeated its forecast of sales between $18.5 billion and $19 billion this year, with earnings excluding some costs in the range of $4.90 to $5.20 per share.
Revenue in Europe jumped 66 percent to $1.34 billion, boosted by the inclusion of sales from Ratiopharm GmbH, which Teva bought in August. North American sales slid 11 percent to $2.06 billion after the company shut a plant in Irvine, California, because of quality-control issues and reduced output at a Jerusalem factory after U.S. regulators issued a warning letter. Teva started producing injectable drugs again in Irvine in April, a year after it halted production.
“We continue to expect the second half of 2011 to be significantly stronger than the first half,” Yanai said in a conference call with analysts.
Teva said it didn’t introduce any significant, exclusive new products in the quarter, unlike a year earlier. The company has profited in the past from being first to launch new generics.
Copaxone sales rose 14 percent to $907 million. Teva raised the drug’s price by 15 percent in January, the third increase in 13 months. The injected medicine has had to compete since September against the first pill approved in the U.S. for multiple sclerosis, Novartis AG (NOVN)’s Gilenya.
“The core business is either declining, or under great risk,” Gilad Alper, an analyst for Meitav Investment House Ltd. in Tel Aviv, said in a telephone interview today. Alper rates Teva’s shares “market perform.”
The drugmaker’s reported profit doesn’t meet generally accepted accounting principles because it excludes costs linked to acquisitions. Net income under GAAP standards rose to $761 million in the quarter from $713 million a year earlier.
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