Tags: Teva | global | generics | demand

Teva Poised to Shine on Global Generics Demand

By    |   Thursday, 02 Feb 2012 08:17 AM

Israeli generic drugmaker Teva Pharmaceutical Industries (TEVA) is poised to shine on global generic drug demand as governments ramp up to buy cheaper generics in their respective economies.

The company has spent the past few years on a buying spree, snapping up other pharmaceuticals to position itself better and is now set to zoom, especially when big blockbuster drugs come off-patent.

Net sales in the third quarter of 2011 hit $4.34 billion, up 2 percent on year. Profits slid to $1.25 per share from $1.30 a share, mainly due to a lack of U.S. product launches.

"The third quarter produced an overall mixed performance. We had strong European and international generic sales, combined with strong results from our branded units. This helped to offset our U.S. generics business, which lacked any significant new launches," says company President and CEO Shlomo Yanai in an earnings statement.

"We expect a strong fourth quarter including an improved U.S. generics business, led by the exclusive launch of generic Zyprexa," which is used in the treatment of schizophrenia and bipolar disorder.

While the company reported a slip in profits in the third quarter of 2011, results beat expectations. Wall Street remains reasonably bullish on the company.

Goldman Sachs recently reiterated a neutral rating on Teva but points out that the company's new CEO may prove to be a catalyst for faster growth. The company's Board of Directors has named Jeremy Levin, a former senior executive at Bristol-Myers Squibb, to succeed Yanai, who is retiring in May.

Barclays Capital initiated coverage at equal weight while Deutsche Bank resumed a buy rating. Meanwhile, credit ratings agencies like the company, especially due to favorable growth trends facing the generic pharmaceutical industry.

"We expect the industry to experience double-digit growth over the next three years as payors and governments worldwide try to control increasing drug costs by encouraging greater use of less-expensive generic drugs," Standard & Poor's analysts write in a recent report.

"At the same time, the record number of patent expirations occurring in 2011-2014 will expand the range of generic drugs available."

Teva has been growing via acquisitions, and that trend should continue.
The company recently wrapped up a $6.8 billion all-cash acquisition of Cephalon, a U.S. pharmaceutical company, only a couple of years after seizing control of Barr Pharmaceuticals in 2008 for $7.5 billion, among others.

Blockbuster


Teva, meanwhile, may be in the running to sell a generic version of the Pfizer's blockbuster cholesterol drug Lipitor.

The company announced late in 2011 that the U.S. Food and Drug Administration had granted tentative approval for the company's Abbreviated New Drug Application (ANDA) for Atorvastatin Calcium Tablets, the generic version of Lipitor. Annual sales of Lipitor were approximately $7.8 billion in the United States as of September 2011.

The company will release fourth quarter results on Feb. 15.

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2012-17-02
Thursday, 02 Feb 2012 08:17 AM
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