Teva Pharmaceutical Industries Ltd., whose unsolicited $40.1 billion offer to buy Mylan NV was rejected this week, said first-quarter profit rose 11 percent on lower costs and a new generic copy of an AstraZeneca Plc drug.
Profit excluding some costs rose to $1.17 billion, or $1.36 a share, from $1.05 billion, or $1.23, a year earlier, the Petach Tikva, Israel-based company said in a statement today. Analysts predicted $1.25, the average of 18 estimates compiled by Bloomberg. The company raised its profit forecast for the year.
Chief Executive Officer Erez Vigodman rattled the pharmaceutical industry last week with the Mylan bid, which would create a giant in generics with more than $27 billion in sales. With Teva’s best-selling product, the multiple-sclerosis drug Copaxone, losing patent protection this year, Vigodman has accelerated cost reductions as he looks for deals to replace the revenue Teva may lose.
Mylan rejected the offer, saying it’s too low and the companies have conflicting cultures. The purchase would immediately boost Teva’s generics division, which had a sales drop in the second half of last year and has lost U.S. market share to lower-cost manufacturers.
Sales fell 0.4 percent to $4.98 billion, above the average analyst estimate of $4.81 billion. Revenue from generic drugs increased 9 percent to $2.6 billion, aided by sales of its copy of Nexium, the AstraZeneca antacid treatment. Teva in January received approval to market a generic version of the drug.
Revenue from Copaxone decreased 14 percent in the quarter to $924 million.
Even so, the Israeli company delivered “strong organic growth through solidifying its base business,” David Maris, an analyst at BMO Capital Markets in New York, wrote in a note. “This was a good quarter for Teva.”
Besides the potential of cheaper generics, Copaxone, an injection that brings in about half of Teva’s profits, faces competition from newer oral drugs. To hold on to its market share, Teva has converted 67 percent of U.S. patients to the patented, three-times-a-week formulation that it introduced in the first quarter last year.
The company’s American depositary receipts fell 2.3 percent to $60.64 at 11:24 a.m. in New York. They have returned 8.6 percent including dividends this year as of yesterday’s close, trailing the 21 percent return for the Bloomberg Europe Pharmaceutical Index.