Pharmaceutical giant Teva Pharmaceuticals Industries Ltd.TEVA announced that it has completed negotiations with the U.S. government over violations of the Foreign Corrupt Practices Act (FCPA).
A look at Teva's year-to-date share price movement shows that the company has underperformed the Zacks classified Generic Drugs industry. Specifically, the stock lost 43.7% during this period, compared with the 39.1% drop for the industry.
Coming back to the latest news, the company has agreed to pay more than $519 million to settle civil and criminal charges of having violated the FCPA bribing government officials of Russia, Ukraine, and Mexico.
We note that the Securities and Exchange Commission (SEC) alleged that Teva had obtained illegal profits worth more than $214 million by carrying out influential payments to government officials in these regions in order to increase its market share, and obtain regulatory approvals, as well as favorable drug purchase and prescription decisions.
As per the settlement, Teva will pay more than $236 million in disgorgement and interest to the SEC. In addition, a penalty of $283 million has to be paid to the U.S. Justice of Department (DOJ) as part of a deferred prosecution agreement. Moreover, the company must retain an independent corporate monitor for at least three years.
We remind investors that in 2012, Teva started a voluntary and comprehensive investigation into its global operations to address government's specific requests for documents and information. The company had engaged an independent counsel to assist in the investigation, and conducted a global corruption risk assessment and a multi-country survey.
Going forward, we expect investors to focus on further updates from the company related to the settlement.
TEVA PHARM ADR Price and Consensus
Teva currently carries a Zacks Rank #4 (Sell).
Key Picks in the Sector
Some better-ranked stocks in the health care sector include Vanda Pharmaceuticals Inc. VNDA , Cambrex Corp. CBM and Heska Corp. HSKA . Each of them sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
Both Vanda and Cambrex posted a positive earnings surprise thrice in the four trailing quarters with an average beat of 56.65% and 19.78%, respectively. Heska, on the other hand, posted a positive earnings surprise in all of the four trailing quarters with an average beat of 301.64%.
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