Berenberg analysts see insurance companies pressuring MS patients to switch to generic versions of Copaxone.
Last year, Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) posted its highest return on Wall Street since 2000, and last week it won its patent case on its branded multiple sclerosis treatment Copaxone in the US Supreme Court, and it was also reported that Pfizer had expressed interest in acquiring the company. Now, a London investment house has recommended selling the stock.
Analysts Louis Pearson and Alistair Campbell of Berenberg estimate that insurance companies will oblige multiple sclerosis patients to switch from Teva’s Copaxone to generic versions of the drug which will probably be launched towards the end of the year, after the patent expires in September. The analysts have started coverage of Teva with a “Sell” rating.
Up to now, no analyst from any of the 32 investment houses that cover Teva has recommended selling the stock. “Around half of the group’s profit is derived from a single branded product, Copaxone. Copaxone will likely face generic competition in 2015 in its biggest market, putting earnings under significant pressure over the medium term, ” Bloomberg cites Pearson and Campbell as writing.
Teva has launched an improved version of Copaxone, administered in three injections per week instead of one daily. The company has already managed to switch 60% of patients taking Copaxone to the new version, which is patent protected until 2030. Nevertheless, Pearson and Campbell write: “We think that consensus is underestimating the rate at which patients will be forced off the brand, and thereby overestimating future earnings from this franchise.”
The analysts believe that Teva’s growth in generic drugs will stop, and that the company has missed the second wave of biosimilars, drugs the patents on which will expire in 2021. They say that Teva’s R&D division has no drugs in development that will compensate from the sharp decline they foresee in sales of Copaxone.
Published by Globes [online], Israel business news – www.globes-online.com