Teva Pharmaceutical Industries
) reported fourth quarter earnings of $1.32 per American
Depositary Share (ADS), a penny short of the Zacks Consensus
Estimate and 17% below the year-ago earnings.
Fourth quarter revenues declined 7.5% to $5.25 billion,
missing the Zacks Consensus Estimate of $5.27 billion.
Full year earnings came in at $5.35 per ADS, a penny below the
Zacks Consensus Estimate but 7.6% above 2011 earnings. Full year
revenues increased 10.9% to $20.32 billion, shy of the Zacks
Consensus Estimate of $20.33 billion.
The Quarter in Detail
Teva reported revenue growth only in Europe (up 2%) in the
reported quarter. Revenues declined in the US (down 14%) and RoW
(down 3%). Currency fluctuations negatively impacted total
revenues by $50 million.
Revenues in the US fell 14% to $2.6 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 $1.0 billion, down
17%. Revenues in the year-ago quarter were much higher due to
major launches in that quarter. During 2012, Teva launched 23 new
generic products and expects to launch a similar number of
products in 2013.
Specialty product revenues declined 7% to $2.1 billion in the
fourth quarter of 2012. Revenues were negatively impacted by the
genericization of Provigil which posted revenues of $25 million,
down 93% from the year-ago quarter. Meanwhile, products like
Treanda ($161 million, up 23%), Copaxone ($1.1 billion, up 14%)
and Azilect ($86 million, up 4%) contributed to growth.
Copaxone revenues benefited from the take-back of distribution
and marketing rights in Europe from
Teva intends to file for approval of a 40 mg thrice-weekly
(3TW - three times a week) formulation of Copaxone in Mar 2013,
followed by potential launch a year thereafter.
Meanwhile, respiratory segment revenues declined 7% to $256
million. The women's health business recorded revenues of $132
million, up 42%.
Revenues in Europe increased 2% to $1.5 billion. Strong
Copaxone revenues and higher revenues from the OTC business drove
European generic revenues of $930 million declined 5% from the
year-ago period. 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 $1.1 billion. Although
performance was strong in Latin America, weaker performance in
Canada (due to government-imposed price reforms) and the sale of
certain businesses of Mepha AG affected revenues.
API revenues increased 3% to $202 million. OTC revenues
increased 24% to $269 million. Teva has a partnership agreement
Procter & Gamble
) targeting the consumer health care market.
Research & Development expense increased to $374 million
from $371 million in the year-ago period. Meanwhile, Selling and
Marketing (S&M) expenditures increased to $1,043 million from
The company bought back 12.7 million shares during the quarter
for about $0.5 billion. Teva has a $3 billion share buyback
program which was announced in December 2011. Teva also announced
a 15% hike in quarterly dividend. We are positive on the company
returning value to shareholders.
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 Zacks Consensus Estimate for earnings and revenues
currently stand at $5.10 per ADS and $20.2 billion, respectively.
The company said that it intends to sell its Irvine manufacturing
facility. We believe a deal will be announced shortly.
Teva is going through a transition period. Headwinds include
EU pricing pressure, potential new competition for branded
products (especially Copaxone) and fewer generic product launches
compared to 2012. With the company not including the impact of
its cost-savings plan in its guidance, we believe Teva has left
some room for delivering above expectations. Share buybacks also
leave some room for upside.
Teva carries a Zacks Rank #3 (Hold).
) currently looks more attractive with a Zacks Rank #2 (Buy).
Meanwhile, Procter & Gamble is also a Zacks Rank #2 stock.
, Sanofi is a Zacks Rank #1 (Strong Buy) stock.
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