Teva warns on profits, cites US market, Copaxone
Teva Pharmaceutical Industries on Thursday said 2018 results would be weaker than expected due to difficult conditions in the US generics market and fierce competition facing its multiple-sclerosis drug.
Israel-based Teva, the world’s largest generic drugmaker, is facing price erosion, increased competition and a consolidating customer base, particularly in the United States.
It also has a hefty debt load that company executives said would be tackled in the near term.
CEO Kare Schultz attributed half of the expected revenue decline in 2018 to its multiple-sclerosis blockbuster Copaxone, which began to face competition last year.
Persistent price pressure in the US generics market, lower revenue following the sale of several businesses and expected competition to its ProAir inhaler in the second half of 2018 also hurt its outlook, he said on an earnings call.
Schultz said Teva was working to stabilize profitability in its generics business worldwide. This, combined with the company’s restructuring and specialty drug launches, would enable Teva to offset most of the decline in Copaxone revenue and return to growth.
“For sure in 2020 we will see growth,” Schultz told Reuters.
A key growth driver will be Austedo, Teva’s recently launched treatment for involuntary movements in patients with Huntington’s disease, which is expected to have revenue of $200 million in 2018, Schultz said.
He said Teva would no longer comment on expected generic price developments, noting such estimates were leading to steeper declines.
Teva’s New York-listed shares fell more than 9% in early trading on Thursday. They fell nearly 50% last year.
The INDXX global generics and new pharma index is down 1.7% this year after a 17.5% rise in 2017.
Teva earned 93 cents per share, excluding one-time items, in the fourth quarter of 2017, down from $1.38 a year earlier. Revenue fell 16% to $5.5 billion. Analysts had forecast Teva would earn 76 cents a share ex-items on revenue of $5.3b., according to Thomson Reuters I/B/E/S.
Teva has already announced a restructuring to combine its genericand specialty-medicine businesses, cut more than a quarter of its workforce and close many of its factories.
The plan, announced in December, aims to reduce costs by $3b. by the end of 2019 from about $16.1b. in 2017.
COPAXONE SALES FALL
Generic-drug sales in the fourth quarter fell to $3.1b. from $3.7b. Sales of Copaxone fell 19% to $821m. Teva forecast Copaxone sales of $1.8b. in 2018.
“We noted further deterioration in the US generics market and economic environment, further limitations on our ability to influence generic-medicines pricing in the long term and a decrease in value from future launches,” Teva said.
For 2018, Teva forecast revenue of $18.3b. to $18.8b., down from $22.4b. in 2017, and EPS ex-items of $2.25 to $2.50, down from $4.01. Analysts were expecting EPS of $2.94 on revenue of $19.3b.
Teva had been saddled with about $35b. in debt since acquiring Allergan’s Actavis generic-drug business for $40.5b. Debt fell by $2.2b. in the fourth quarter to $32.5b. and by a further $1.1b. so far in 2018.
Teva said it expects to pay off at least $3.5b. in debt this year.
“Starting in 2018 we are focused on meeting our financial obligations and ensuring a much more solid and sustainable business model,” Schultz said.
Chief financial officer Mike McClellan said Teva might look at more divestitures. The company has closed six plants since December and expects to announce another six this year.
Last week, the company said it planned to raise $5b. in debt securities. In December, it announced the suspension of its dividend. (Reuters)