Teva Pharmaceutical Industries ( TEVA ) reported first
quarter earnings of $1.12 per American Depositary Share (ADS), a
couple of cents above the Zacks Consensus Estimate but 23.8% below
the year-ago earnings.
First quarter revenues declined 3.9% to $4.9 billion, just above
the Zacks Consensus Estimate of $4.8 billion.
The Quarter in Detail
Teva reported revenue growth only in Europe (up 11%) in the
reported quarter. Revenues declined in the US (down 11%) and RoW
(down 3%). Currency fluctuations negatively impacted total revenues
by $35 million.
Revenues in the US fell 11% to $2.4 billion in the reported
quarter, mainly due to the genericization of Provigil in 2012 and
higher generic revenues in the year-ago quarter.
The US generic business posted revenues of $895 million, down
27%. Revenues in the year-ago quarter were much higher due to major
launches in that quarter. The first quarter of 2013 saw Teva
launching its generic version of TriCor. 23 generic launches are
slated for 2013.
Specialty product revenues remained flat at $2.1 billion in the
first quarter of 2013. Revenues were negatively impacted by the
genericization of Provigil which posted revenues of $24 million,
down 92% from the year-ago quarter. However, the negative impact of
the genericization of Provigil was offset by the strong performance
of products like Treanda ($171 million, up 16%), Copaxone ($1.1
billion, up 17%) and Azilect ($93 million, up 29%).
Copaxone revenues benefited from the take-back of distribution
and marketing rights in Europe from Sanofi ( SNY ).
Teva is currently seeking FDA approval of a 40 mg thrice-weekly
(3TW - three times a week) formulation of Copaxone; a response
should be out in the first quarter of 2014.
Meanwhile, respiratory segment revenues grew 15% to $219
million. The women's health business recorded revenues of $103
million, down 5%.
Revenues in Europe increased 11% to $1.5 billion. Strong
Copaxone revenues and higher revenues from the OTC and generics
business drove performance.
European generic revenues of $873 million grew 9% from the
year-ago period mainly due to higher generic penetration in France
and Italy and successful launches in the quarter. This was
partially offset by macro-economic conditions and healthcare
reforms in major European markets. Teva is working on improving its
diversity, reach and flexibility in Europe.
RoW (Rest of the World including Canada, Israel, certain markets
in Eastern Europe, Latin America and Asia) revenues slipped 3%
during the quarter to $966 million. Unfavorable currency movement,
lower revenues in Latin America, and weaker performance in Canada
(due to government-imposed price reforms) led to the decline in
API revenues decreased 7% to $186 million. OTC revenues
increased 56% to $306 million. Teva expects the OTC business to
continue growing in double-digits.
Research & Development expense increased to $329 million
from $292 million in the year-ago period. Meanwhile, Selling and
Marketing (S&M) expenditures increased to $985 million from
The company bought back 5.2 million shares during the quarter
for about $200 million. Teva has a $3 billion share buyback program
which was announced in Dec 2011.
2013 Outlook Maintained
The company maintained its outlook for 2013. Teva expects to
earn $4.85 - $5.15 per ADS on total net revenues of $19.5 - $20.5
billion. The company intends to sell its Irvine manufacturing
facility. The Zacks Consensus Estimate is currently within the
company's guidance range at $5.08 per share.
Teva is going through a transition period. Although the
company's first quarter results were above expectations, we remain
concerned about the performance of the US generics business.
Moreover, new competition has entered the multiple sclerosis market
in the form of Tecfidera.
Although Teva expects the US generics business to improve in the
second half of the year, the entry of additional generic
competition for Pulmicort would affect the performance of the US
generics business. The company said that if it remains
semi-exclusive on generic Pulmicort, it would be in a position to
achieve the mid to high end of its US generics business guidance
range of $4.3 billion - $4.7 billion.
However, the entry of additional competitors this year would
lead to Teva delivering US generic sales at the low end or slightly
below the low end of the guidance range. Teva currently carries a
Zacks Rank #3 (Hold).
Companies in the pharma space that currently look
well-positioned include Cubist Phamaceuticals ( CBST ) and
Catalyst Pharmaceuticals Partners ( CPRX ). While Cubist
Pharma is a Zacks Rank #2 (Buy) stock, Catalyst Pharma is a Zacks
Rank #1 (Strong Buy) stock.CUBIST PHARM (CBST): Free Stock Analysis ReportCATALYST PHARMA (CPRX): Free Stock Analysis
ReportSANOFI-AVENTIS (SNY): Free Stock Analysis
ReportTEVA PHARM ADR (TEVA): Free Stock Analysis
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