Teva Fourth-Quarter Earnings Slides as Generic Sales Drop

Teva Pharmaceutical Industries Ltd.’s fourth-quarter earnings fell 19 percent as generic-drug sales dropped and competition hurt the Provigil sleep-disorder pill.

Profit excluding some costs declined to $1.14 billion, or $1.32 a share, from $1.4 billion, or $1.59, a year earlier, the Petach Tikva, Israel-based company said in a statement today. Analysts predicted $1.33, the average of 24 estimates compiled by Bloomberg. Teva raised its quarterly dividend 15 percent.

“Some people might have hoped for a bigger dividend increase,” though the payment shows the company is trying to acknowledge investor concerns, said Gary Nachman, an analyst at Susquehanna Financial Group in New York who rates Teva neutral.

Profit is suffering as patents on key products begin to expire. Provigil lost patent protection last year, and sales plunged 93 percent in the quarter. Teva’s top-selling product, the Copaxone treatment for multiple sclerosis, may lose sales to copies this decade, along with the cancer medicine Treanda and Nuvigil, a treatment for excessive sleep.

Sales of generic products declined from the “unusually high” level in the 2011 fourth quarter, when Teva began marketing a copy of Eli Lilly & Co.’s Zyprexa and Ranbaxy Laboratories Ltd. began selling a generic of Pfizer Inc.’s Lipitor in partnership with Teva, the company said.

Photographer: Akos Stiller/Bloomberg

An employee works with sterile products during the manufacture of pharmaceuticals inside Teva Pharmaceutical Industries Ltd.'s new factory in Godollo, Hungary. Close

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Photographer: Akos Stiller/Bloomberg

An employee works with sterile products during the manufacture of pharmaceuticals inside Teva Pharmaceutical Industries Ltd.'s new factory in Godollo, Hungary.

Ending Programs

Teva fell 1 percent to 138 shekels at the close in Tel Aviv. The company’s more actively traded American depositary receipts declined less than 1 percent to $37.96 at the close in New York. The ADRs lost 13 percent in the past 12 months including reinvested dividends, compared with a 19 percent return for the Bloomberg Europe Pharmaceutical Index.

Teva Chief Executive Officer Jeremy Levin in December pledged to revive growth by focusing research on treatments for respiratory and central nervous system illnesses. Teva ended some programs, such as a collaboration on an experimental cancer drug with Israeli biotechnology company CureTech Ltd., and Levin has said he will cut as much as $2 billion of costs in the next five years.

Teva plans to build its business through “aggressive business development,” Levin said on an analyst call today. He said growth would come from expanding into new geographical areas, licensing deals, and small to mid-size acquisitions.

‘Progressed Well’

The New Therapeutic Entities business, an area Teva has pledged to target, “has progressed well” and has “billions of dollars” in potential sales, Levin said. Teva’s approach will be to license branded products and then reformulate them to provide newer treatments, he said.

Sales fell 7.5 percent to $5.25 billion, matching the average analyst estimate. Revenue from generic drugs in North America sank 17 percent to $1 billion. In Europe, generic sales slipped 5 percent to $930 million.

Revenue from Copaxone increased 14 percent in the quarter to $1.1 billion. The injected drug faces competition from a newer oral treatment, Novartis AG’s Gilenya. Teva has been trying to delay approval of an MS pill from Biogen Idec Inc. called Tecfidera. U.S. regulators are scheduled to decide whether to approve Tecfidera by March 28.

Levin in November issued 2013 revenue and profit forecasts that were below the average analyst estimates compiled by Bloomberg. The company is confident in its forecasts, he said today.

To contact the reporter on this story: David Wainer in Tel Aviv at dwainer3@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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