--Teva's sales and earnings fall on increased competition
--Company points to new product launches
--CEO Jeremy Levin says investors haven't yet become comfortable
with new strategy
(Updates throughout with details and company comment.)
By Joseph Walker
Teva Pharmaceutical Industries Ltd.'s (TEVA) first-quarter
earnings fell 27% as the drug maker saw a sharp drop in
generic-medicine sales and increased competition for its alertness
drug Provigil.
Israeli-based Teva, led by Chief Executive Jeremy Levin, is in
the midst of a transition as it looks to cut costs, divest noncore
assets and focus on small- to mid-size acquisitions. Investors have
so far been skeptical, and Teva shares have fallen 22% since Mr.
Levin took over the company last May.
The company's biggest-selling drug, Copaxone for multiple
sclerosis, is expected to face increased pressure from a recently
launched competitor from Biogen Idec Inc. (BIIB). Copaxone sales
soared 17% to $1.06 billion in the first quarter, driven largely by
price and unit volume increases in the U.S.
Teva said it had sought U.S. regulatory approval for a
less-frequent dosing schedule of Copaxone, which could make it more
competitive with Biogen's drug. The company expects the U.S. Food
and Drug Administration to make a decision in the first quarter of
2014.
Other areas of the company's business, however, suffered. Sales
of Provigil, a branded drug that improves concentration and is used
to treat sleeplessness, plunged 92% to $24 million after losing
U.S. patent protection last year. Sales of Teva's generic drugs
fell 12% to $2.31 billion as the result of increased
competition.
Overall revenue fell 3.9% to $4.9 billion, slightly above
analysts' average expectation of $4.85 billion.
Teva's American depository shares were recently down 36 cents at
$37.53.
Teva has grown through a series of acquisitions to become the
world's largest maker of generic drugs and has diversified into
nongeneric businesses, such as over-the-counter medicines and
patent-protected, branded drugs.
Mr. Levin also unveiled plans in December to reshape the drug
maker, reduce annual costs by up to $2 billion over the next five
years and sharpen the focus of Teva's research-and-development
pipeline. The company expects to realize benefits from the
cost-cutting, including the closing of a California facility,
between 2014 and 2017.
Teva also pointed to new drug launches, including a generic--or
biosimilar--version of Amgen Inc.'s (AMGN) anti-infection drug
Neupogen later this year. On Wednesday, the company won a ruling
from the FDA that will allow women 15 years of age and older to
purchase its Plan B contraceptive pill without a prescription.
During a conference call with analysts, Mr. Levin said some
investors were still uncomfortable with the organizational and
strategic changes he has made, which has had a negative impact on
the company's stock price.
"This is a sophisticated company that's undergoing significant
change," Mr. Levin said. "It is very difficult for people to look
back and understand as you walk away from essentially a top-line
driven strategy driven by acquisitions."
For the first quarter, Teva reported a profit of $630 million,
or 74 cents a share, down from $859 million, or 97 cents a share, a
year earlier. Excluding restructuring, acquisition and other items,
adjusted per-share earnings fell to $1.12 a share from $1.47.
Analysts polled by Thomson Reuters had forecast earnings of $1.10 a
share.
--Melodie Warner contributed to this article.
Write to Joseph Walker at joseph.walker@dowjones.com
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