Teva Pharmaceutical Industries said on Thursday it would continue to pursue a breach of contract suit against the former owners of its Rimsa plant in Mexico after the Supreme Court of the State of New York rejected the claims of fraud.
Teva subsidiaries suit Rimsa’s previous owners, the Espinosa family, and PPTM International S.a.r.l. (PPTM), the former owners of the Mexican drugmaker Rimsa, which Teva acquired in 2015 for $2.3 billion.
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Israel-based Teva, the world’s largest generic drugmaker, shut down the plant, saying the operation was overrun by improprieties. Rimsa denies this claims.
New York court on Wednesday, said the Espinosas did not commit fraud, but at the same time did not reject Teva’s breach of contract claims, according to Reuters, citings people familiar with the legal case.
Teva said in a statement on Thursday without elaborating: “The decision does not eliminate all of our claims. Our breach of contract claim against the Espinosas, arising out of their misrepresentations, will continue to proceed with the benefit of discovery.”
“Litigation regarding this limited issue will move forward and the Espinosas will continue to vigorously challenge Teva’s claim that they breached the sale agreement,” a spokesman for the family said in an email.
Teva’s $6 billion loss
A huge loss of $ 6 billion to Teva in the second quarter. Teva made a $6.1 billion provision for the decline in the value of the investment in Allergen’s generic business, which was acquired in August 2016 for $38 billion. The company cut its profit forecast for 2017 to $700 million and reduced the dividend per share by 75%. The share is down 7% in pre-US trading.
Teva has announced a reduction in the value of the company’s generic assets in the US. Teva has also announced that it will reduce its adjusted earnings per share in 2017 from $5.30-4.90 per share to $4.5-4.3 per share, or $ 700 million. The company announced a dividend reduction of 75% to 8.5 cents per share.
Teva also sees a sharp drop in cash production, despite a good quarter for Copaxone, which enjoyed another quarter in which it was exempted from generic competition for the company’s most profitable product: Copaxone (40 milligrams) for the treatment of multiple sclerosis.
“The results for the second quarter were lower than we expected as a result of the performance of our generic business in the US and the continuing deterioration in Venezuela. These factors also led us to reduce our forecasts for the rest of the year. All of us in Teva understand the frustration and disappointment of our shareholders in light of these results, “said Prof. Yitzhak Peterburg, President and Chief Executive Officer of Teva. “Our generic business in the US has experienced an acceleration in price erosion and a decline in sales volumes mainly as a result of our customers’ increasing concentration, increased competition from a growing number of generic drug approvals by the US FDA and several new product launches that have been rejected or influenced by greater competition.”
In February, CEO Erez Vigodman stepped down after three years after he took his post in an effort to turn around the fortunes of the company. He was replaced on an interim basis by Chairman Yitzhak Peterburg. In April, CFO Eyal Desheh also said he would step down. Those positions have not yet been permanently filled.
Teva’s shares were 0.6 percent lower at midday in Tel Aviv. They are down 20 percent so far in 2017 and 65 percent since the start of 2016.