- Price declines in U.S. generics unlikely to deepen, Teva says
- Israeli drugmaker forecasts second-quarter EPS of $1.16-$1.20
Shares of Teva Pharmaceutical Industries Ltd. rose by the most in more than five months after the world’s largest maker of generic drugs said declines in the prices of copycat medicines in the U.S. were unlikely to deepen.
“We find the number of companies citing a tougher pricing environment or price deflation seems to have grown at an almost incredible rate,” Sigurdur Oli Olafsson, head of Teva’s generics medicines unit, told analysts on a conference call on Monday. "Teva has not seen any fundamental change or worsening in the pricing environment. What this boils down to is each individual company’s business model."
Teva also reiterated that it expects to complete its proposed $40.5 billion acquisition of Allergan Plc’s generics business by the end of June. The stock climbed 3.7 percent, the most since Dec. 1, to 198.80 shekels as of 5:24 p.m. in Tel Aviv.
“Teva is showing confidence in the generics industry,” said Elizabeth Krutoholow, an analyst at Bloomberg Intelligence. “This was the biggest risk heading into their earnings and ahead of the closing of the Allergan deal.”
Mylan NV and Perrigo Plc, two of Teva’s biggest rivals, both said in recent weeks that they expect continued price declines for generics as a result of accelerated competition in the sector. Olafsson reiterated that his company sees a 4 percent drop in the U.S.
Sales of generics -- which are generally less profitable than the company’s specialty pharmaceutical drugs -- declined by 17 percent to $2.17 billion, Petach Tikva, Israel-based Teva said in a statement on Monday. The fourth consecutive quarter of declines was primarily because revenue from the U.S. plunged 32 percent as the drugmaker lost exclusivity on heartburn pill Nexium and asthma treatment Pulmicort.
First-quarter profit, excluding some costs, dropped 12 percent to $1.20 a share from $1.36 as the number of outstanding shares climbed following a December equity offering, Teva said. That was in line with the company’s forecast of $1.16 to $1.20 a share. For the second quarter, Teva again forecast earnings of $1.16 to $1.20 a share.
The generics business, which has shrunk to less than half of Teva’s sales over the past year, will expand to account for almost two-thirds of the Israeli company’s revenue after it completes the Allergan transaction.