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Teva 2015 guidance sees falling revenue, stable profit

Generic competition for Copaxone and foreign currency volatility will hit Teva’s sales.

Erez Vigodman,   Teva

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When Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) published its forecast for 2014, it gave two forecasts: one with generic competition for Copaxone, its flagship drug, and one without competition. 2014 ended without any generic competition for Copaxone, the more positive scenario for Teva, and the uncertainty shifted to 2015. The company is publishing its forecast for 2015 today, with the question of a generic version of Copaxone unsettled. Teva is predicting (as a “modeling assumption only, ” it stresses) the launching of two generic versions of Copaxone in the US in September 2015, which is actually the original expiry date for Teva’s patent, before the expiry was brought forward to 2014. The company expects its 2015 Copaxone sales to total $3.5-3.7 billion (for the sake of comparison, sales of the drug totaled $3.1 billion in the first three quarters of 2014). The company’s gross profit margins in the multiple sclerosis sector (i.e. Copaxone) are 89-90%, and its profit is $2.6-2.8 billion. An earlier introduction of generic competition will therefore cut Teva’s operating profit by $30-50 million per month. The company’s operating profit forecast range is $5.7-5.9 billion, with expected revenue of $19-19.4 billion, down from expected revenue of $20.3 billion in 2014.

Changes in the shekel exchange rates are also expected to subtract $700 million from Teva’s top line, and introduction of generic competition to Pulmicort, Teva’s biggest generic drug, will deduct $400-500 million from its revenue. Exchange rate changes will cost the company $60-70 million in operating profit, and competition with Pulmicort $100-200 million. In its bottom line, Teva expects a net profit of $5-5.30 per share ($4.3-4.5 billion), compared with an expected net profit of $5-5.10 per share ($4.3-4.4 billion) in 2014.

Teva expects to generate $4.3-4.7 billion in cash flow from activity in 2015, and plans to spend $1-1.2 billion on buying back its own shares. A major acquisition that Teva is expected to make would probably change the forecast. Up until now, Teva has not been an active player in the volatile market of pharmaceutical mergers and acquisitions, but the company is not ruling out the possibility, and in its report today states that its forecast does not include the potential effect of any business development activity whatsoever. Generic drugs are expected to general $9.1-9.5 billion in annual revenue for Teva, and the company expects improvement in its profit and profit margins, given its focus on more profitable products.

The analysts’ $20.1 billion consensus in the revenue line was higher than Teva’s forecast – although still less than its projected 2014 revenue – but the consensus for the profit line was as about the same as Teva’s forecast. In any case, the range of the analysts’ forecasts was wide, due to uncertainty about Copaxone.

“Commitment to utilizing our strong cash flow to return cash to shareholders”

“We are pleased with the progress we have made this year, which has created a strong foundation from which our business can continue to grow while delivering value to patients. We remain committed to utilizing our strong cash flow to return cash to shareholders and invest in long-term organic growth, while maintaining the flexibility to engage in strategic business development opportunities, ” stated Erez Vigodman, President & CEO of Teva.

He added, “Generics remain at the heart of our business, both as the cornerstone of the company, but also as an area that has great impact on society. At the same time, we anticipate four specialty product approvals and five submissions in 2015… As we look to the future, we will continue to deliver on our operational, financial and strategic goals to further explore the unique space Teva has at the intersection between generics and specialty, and increase access to healthcare to patients around the world.”

Teva yesterday reported the launching of a generic version of Celebrex, originally produced by Pfizer for treatment of various inflammations. US sales of the original drug total $2.56 billion a year. Teva’s share is traded at a market cap of $48.2 billion, after a 44% rise in its price this year.


Published by Globes [online], Israel business news –



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