Teva Pharmaceutical Industries Ltd. (TEVA) swung to a
fourth-quarter profit as sales jumped, buoyed by a 25% rise in
sales of multiple sclerosis drug Copaxone and its 2008 acquisition
of Barr Pharmaceuticals.
The Israeli generic drug maker dominates the consolidating
generic-drug industry as the branded pharmaceutical sector is under
pressure from looming patent expirations in coming years. Teva
recently projected revenue will more than double to $31 billion in
2015, and backed its 2010 outlook Tuesday, warning that
foreign-exchange volatility could have an impact on revenue.
J.P. Morgan analyst Chris Schott noted that Teva's
fourth-quarter results were in line with expectations, but he is
encouraged by Teva's sales trends heading into an "exceptionally
strong" year.
American depositary shares of Teva recently traded down 32 cents
to $58.54.
During a conference call Tuesday, Chief Executive Shlomo Yanai
said the fourth-quarter results demonstrate the company's business
balance amid a troubled world economy, volatile market conditions,
and foreign exchange effects.
Teva projects 2010 earnings of $4.40 to $4.60 a share, excluding
items, on revenue of about $16 billion, but warned that
foreign-exchange volatility may continue.
In the fourth quarter ended Dec. 31, exchange rate differences
contributed $98 million to sales, while hurting sales by $572
million for the total year.
Teva's wide geographical presence provides a "natural hedge" to
that currency exposure and minimizes the impact on the company's
earnings.
Wall Street currently expects 2010 earnings of $4.54 a share,
excluding items, on revenue of $16 billion.
during the call, Chief Financial Officer Eyal Desheh said there
would be "significant variance" between the first quarter and the
rest of the year citing the timing of new generic launches, regular
seasonality and an increased benefit from competitor supply
disruptions as the year progresses.
For the fourth quarter, Teva's earnings were $379 million, or 42
cents a share, compared to a loss of $694 million, or 88 cents a
share, a year ago. The year-ago results were weighed down by items
related to the $7.46 billion Barr deal.
Excluding items, earnings were 94 cents a share in the latest
quarter, just shy of a Wall Street projection of 95 cents,
according to Thomson Reuters.
Sales rose 33% to $3.8 billion, about in line with analyst
expectations, from $2.85 billion, with the integration of Barr
boosting sales in all regions, particularly in the U.S., Russia,
Poland, Germany and Croatia.
Global sales of Copaxone rose 25% to $747 million; in the U.S.,
sales increased 33% to $509 million.
The company said it plans to submit for U.S. regulatory approval
of a lower-volume formulation of Copaxone, which may reduce
injection pain and site reaction, by the end of March.
Fourth-quarter pharmaceutical sales in North America increased
35% to $2.32 billion, accounting for 61% of all pharmaceutical
sales. Teva said it benefited from generic launches including
Takeda Pharmaceutical Co. Ltd.'s (4502.TO) Prevacid, Sanofi-Aventis
SA's (SNY, SAN.FR) Allegra-D 12 Hour and the re-launch of
AstraZeneca Plc's (AZN, AZN.LN) Pulmicort Respules.
In Europe, pharmaceutical sales rose 30% to $925 million, while
international pharmaceutical sales rose 35% to $553 million.
As of Feb. 5, Teva had 216 product applications awaiting Food
and Drug Administration approval, covering annual U.S. branded
sales of over $113 billion.
Of the 140 patent challenges included in that figure, Teva
believes it is the first to file--providing 180-day market
exclusivity--on 89 applications with annual U.S. branded sales
exceeding $55 billion.
Teva also boosted its quarterly dividend by 16.7% to 0.7 shekel,
or about 18.7 U.S. cents.
The company has been making acquisitions in recent years and is
still looking for targets as it seeks to become less dependant on
Copaxone and the concentration of sales in North America. It has
said it plans about $5 billion of smaller acquisitions, mostly
outside the U.S., through 2015.
Teva is still in the running to acquire Ratiopharm
International, the generic drugs company being sold by Germany's
Merckle family, after the second round of bidding, a person
familiar with the matter told Dow Jones Newswires earlier this
month. It is competing with U.S. pharmaceuticals company Pfizer
Inc. (PFE), Swedish private equity firm EQT Corp. (EQT) and
Iceland's Actavis Group (ACT-IC), the person said.
Although he declined to comment on Teva's interest in
Ratiopharm, Yanai said Tuesday that Europe is key to its future
growth for the next five years.
-By Thomas Gryta, Dow Jones Newswires; 212-416-2169;
thomas.gryta@dowjones.com
(Steve McGrath contributed to this article.)