Teva First-Quarter Profit Rises 8% on New GenericsDavid Wainer
Teva Pharmaceutical Industries Ltd.’s first-quarter earnings rose 8 percent, beating analyst estimates, as the company introduced generic drugs and a longer-acting version of the multiple sclerosis treatment Copaxone.
Profit excluding some costs rose to $1 billion, or $1.22 a share, from $960 million, or $1.12, a year earlier, the Petach Tikva, Israel-based company said in a statement today. Analysts predicted $1.20, the average of 20 estimates compiled by Bloomberg.
Under Chief Executive Officer Erez Vigodman, who took over the world’s largest maker of generic drugs on Feb. 11, Teva is seeking to revive growth through deals and as much as $2 billion in cost cuts. Vigodman, speaking to analysts for the first time today since taking the helm, pledged to divest 11 plants as the company considers a “more ambitious” cost-savings plan.
Teva’s bestselling drug Copaxone, which analysts say contributes more than 50 percent of profit, may face competition from cheaper generics at the end of this month.
The company’s American depositary receipts rose 1.5 percent at 9:45 a.m. in New York. The ADRs have returned 23 percent including reinvested dividends this year through yesterday, outpacing a 9.9 percent return for the Bloomberg Europe Pharmaceutical Index.
The stock has been bolstered by speculation Teva will join in an acquisition spree that has seen drugmakers including Pfizer Inc., GlaxoSmithKline Plc and Novartis AG announce about $115 billion of planned deals since the end of March.
At the same time, progress in shifting patients to the new three-times-a-week formulation of Copaxone, and away from the daily injection, has convinced some analysts the company may succeed in converting as many as half of its U.S. users. The patent on the daily injection expires in late May, though Teva has filed a lawsuit to try to extend it until September 2015.
Longer-acting Copaxone has captured about 11 percent of the U.S. multiple sclerosis market, giving Teva’s two versions of the drug a 34 percent share, Teva said. The company is on track to convert 30,000 patients to its new therapy by May and 40,000 by the end of the year, it said.
“Copaxone sales are holding up for now partly because they’re doing well with the conversion process but also because they’ve been raising the price of the drug,” said Gilad Alper, a senior analyst at Petach Tikva-based Excellence Nessuah Brokerage Ltd. “Now it’s all about whether a generic comes in at the end of the month.”
Copaxone already faces competition from new branded drugs that come in pill form, and is losing market share. Analysts estimate that sales of Copaxone will fall about 50 percent by 2016 as the relative ease of oral pills lures patients from Teva’s older injected product.
Sales rose 2 percent to $5 billion, below the average analyst estimate of $5.12 billion. Revenue from generic drugs increased 3 percent to $2.4 billion.
Teva’s generic sales are benefiting from the marketing of copies of the Xeloda chemotherapy medicine and Evista for osteoporosis this year, which Ronny Gal, an analyst at Sanford C. Bernstein & Co., said may help the company reach the higher part of its forecast range in 2014. Teva reaffirmed its forecast for full-year earnings excluding some costs of $4.20 to $4.50 a share, assuming generic competition for Copaxone.
Revenue from Copaxone increased 1 percent in the quarter to $1.07 billion. Generic-drug makers are seeking approval to market copies of Copaxone on May 25. If granted U.S. Food and Drug Administration approval, generic companies will need to decide whether to file at risk of having to pay damages if they lose the pending patent-infringement case.
The generic filers include Momenta Pharmaceuticals Inc. and partner Novartis AG’s Sandoz; a Mylan Inc. partnership with Natco Pharma Ltd.; and Synthon BV with an undisclosed partner.