Teva Pharmaceutical Industries Ltd.'s (TEVA) first-quarter
profits rose 7%, as strength in Europe and emerging markets help
offset North American weakness.
The Israeli company, the world's largest generic drug maker,
backed its full-year financial projections despite weakness in
North America, its largest market, where generic drug sales were
hit by a lack of new launches and manufacturing issues. Overall,
Teva's adjusted earnings were in-line with Wall Street
expectations, while revenue fell short.
"We continue to expect that growth will accelerate in the second
half of the year," Shlomo Yanai, Teva's chief executive officer,
said on a conference call. "We do not view the challenges we faced
in the U.S. during the quarter as representing a trend."
Teva's American depositary shares recently rose 3% to
$48.53.
Recent months have been busy for Teva. Last week, it agreed to
buy Cephalon Inc. (CEPH) for $6.8 billion, to boost its presence in
branded drugs. In March, Teva unveiled a joint venture with Procter
& Gamble Co. (PG) that combines their over-the-counter drug
businesses outside North America, projecting sales of up to $4
billion by the mid to later part of the decade.
The company also reported positive data last month on its oral
multiple sclerosis treatment laquinimod, developed by Sweden-based
Active Biotech (ACTI.SK), which may provide a foothold in the
emerging market for oral MS treatments while also helping dilute
the dependence on Copaxone's profits.
"We continue to make progress in executing our long-term
strategy of building an even stronger and more diversified
business," Yanai said Wednesday.
Teva backed its full-year adjusted earnings projection of $4.90
to $5.20 a share, compared to analyst views of $5.10 a share,
according to Thomson Reuters. Teva expects full-year sales of $18.5
billion to $19 billion, compared with Wall Street estimates of
$18.7 billion.
The company's guidance doesn't include the Cephalon acquisition,
which is expected to close in the third quarter.
Teva said it stands behind its 2012 projection from last year
that called for per-share earnings of $5.30 to $5.86 on revenue of
$21 billion to $23.2 billion.
For the three months ended March 31, earnings rose to $761
million, or 84 cents a share, from $713 million, or 79 cents a
share. Excluding items, earnings per share were $1.04, in line with
analyst expectations.
Sales rose 12% to $4.08 billion, below an analyst estimate of
$4.27 billion.
Teva said sales were hurt by about $100 million from
manufacturing and regulatory problems at plants in Irvine, Calif.,
and Jerusalem. The company recently resumed operations at Irvine
and is awaiting another Food and Drug Administration inspection of
the Jerusalem facility.
North American sales, which make up 51% of business, reached
$2.06 billion in the quarter, a fall of 11%. Sales of generic drugs
in the U.S. dropped 32% to $952 million in the quarter, primarily
because the year-earlier quarter included benefits from several
major launches and product exclusivities.
In the latest quarter, the company had no significant launches,
but it expects new products to help drive growth later in the year,
including generic versions of Eli Lilly & Co.'s (LLY)
antipsychotic Zyprexa and Sanofi-Aventis SA's (SNY, SAN.FR) allergy
drug Nasacort AQ.
Sales in Europe rose 66% to $1.34 billion in the quarter,
accounting for 33% of total sales. The region's performance was
driven by its $5 billion deal for German generic-drug company
Ratiopharm last year.
In other markets, sales rose 26% to $672 million, making up 16%
of the total sales.
Branded sales in the quarter were driven by strong sales of
flagship multiple sclerosis drug Copaxone, respiratory treatments,
and women's health products. Sales of Copaxone globally rose 14% to
$907 million.
Momenta Pharmaceuticals Inc. (MNTA) and Mylan Inc. (MYL) have
both filed to produce generic Copaxone, with a court trial on the
matter scheduled for September.
On the call, William Marth, head of Teva's Americas business,
reiterated that the companies aren't in settlement talks and he
doesn't think "there is anyone close to approval at this point in
time." Teva has argued that the complexity of Copaxone should
preclude FDA approval without clinical trials showing that the
generic version is similar.
Marth also said Teva's efforts to get approval for a generic
version of Sanofi's blood thinner Lovenox are "alive and well," but
declined to comment further. Momenta and partner Novartis (NVS)
have the only generic version on the market and the approval of
Teva's drug has been repeatedly delayed.
-By Thomas Gryta, Dow Jones Newswires; 212-416-2169;
thomas.gryta@dowjones.com
-Sten Stovall in London contributed to this report.
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