Teva Pharmaceutical Industries Limited (TEVA): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report


Teva's first quarter 2014 earnings of $1.22 per ADS were a penny short of the Zacks Consensus Estimate but 9% above the year-ago earnings. First quarter revenues grew 2% to $5.001 billion, slightly below the Zacks Consensus Estimate of $5.056 billion. Teva is going through a transition period and 2014 will be a challenging year for the company. Headwinds include new competition for branded products and fewer generic product launches. Moreover, the company could start facing generic competition for Copaxone which would cut 2014 earnings by 60 cents and revenues by $500 million. While the company's new strategy looks good, execution remains the key. We prefer to remain on the sidelines given the low visibility on long-term growth prospects.


Headquartered in Petach Tikva, Israel, Teva Pharmaceutical Industries Limited is a global pharmaceutical company that develops, manufactures, and markets both branded and generic drugs, as well as active pharmaceutical ingredients (APIs) in North America, Europe, Latin America, Asia, and Israel. Teva's generic product portfolio includes tablets, capsules, ointments, creams, liquids, injectables, and inhalants. The company's main branded products include Copaxone (multiple sclerosis) and Azilect (Parkinson's disease). Besides this, Teva's branded product portfolio consists of respiratory products like ProAir, a short-acting beta-agonist for the treatment of bronchial spasms and exercise-induced bronchospasm, and Qvar, an inhaled corticosteroid for long-term control of chronic bronchial asthma. Moreover, the company has several candidates in its pipeline, which are in different stages of clinical development for the treatment of multiple sclerosis, asthma, Crohn's disease, lupus and oncology.

In Dec 2008, Teva acquired Barr Pharmaceuticals, a U.S.-based multinational generic pharmaceutical company with operations mainly in the U.S. and Europe, for approximately $4.6 billion in cash and 69 million American Depository Shares (ADS). This acquisition boosted Teva's product portfolio which now includes several generic pharmaceutical products as well as women's health products. The combined company also has greater resources and expertise in biogenerics. The Barr acquisition has enhanced Teva's leadership position in the U.S. and allowed it to expand its presence in Europe.

In Oct 2011, Teva acquired Cephalon, Inc. for $6.8 billion. The Cephalon deal is in line with Teva's long-term strategy of expanding and strengthening its branded and specialty pharma business.

Teva has been working on strengthening its position in Europe through its acquisition of Germany's second largest generics producer, ratiopharm. This deal has helped Teva strengthen its position in key European markets, especially Germany, the second largest generic market in the world. Teva should also gain a strong foothold in rapidly growing generic markets like Spain, Italy and France.

Teva reported total revenues of $20.3 billion in 2013, flat from the year-ago period.

2013 Geographical Mix 2013 Revenue Mix

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: ADS , TEVA

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