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Teva Falls on Disappointing 2017 Sales & Earnings Guidance
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Teva Pharmaceutical Industries Ltd. (TEVA - Free Report) provided a weaker-than-expected sales and earnings guidance for 2017 seeing that its blockbuster multiple sclerosis drug, Copaxone, is reeling under competitive pressures.
Following the announcement, shares of the Israeli generic pharmaceuticals company declined almost 8% on Friday.
Teva’s shares have tanked 44.7% in 2016, underperforming a decline of 35.9% for the Zacks-classified Generic Drugs industry.
In 2017 so far, the company’s shares were down 3.2%, comparing unfavorably to a dip of 0.1% for the industry.
Coming back to the 2017 guidance, Teva expects revenues in the range of $23.8–$24.5 billion and earnings in the band of $4.90–$5.30 per share. Both sales and earnings fell short of the Zacks Consensus Estimate of $25.58 billion and $5.36 per share, respectively. Management cited the shortfall of product launches as the key reason for the subdued guidance.
While the Generics segment is expected to record revenues of $13.9–$14.3 billion, Specialty segment sales (excluding Copaxone) are expected to be between $4.0 billion and $4.2 billion. Copaxone is expected to generate sales of $3.8 billion to $3.9 billion.
Copaxone faces competition from existing MS products such as Avonex, Betaseron, Rebif, Extavia and Tysabri. Competition in the MS market has further intensified with the launch of oral drugs like Biogen’s Tecfidera, Novartis AG’s (NVS - Free Report) Gilenya, and Sanofi’s Aubagio.
Moreover, Teva is facing patent challenges for the 40 mg thrice-weekly formulation of Copaxone. However, the company mentioned that the 40 mg formulation is not expected to face generic competition in the U.S. this year. The 20 mg formulation of Copaxone, however, continues to face generic competition. In Jun 2015, Novartis’ generic arm – Sandoz, along with its partner Momenta Pharmaceuticals, Inc. , launched Glatopa, a once-daily generic version of 20 mg formulation of Copaxone.
In the latest press release, Teva mentioned that the entry of two generic competitors to Copaxone in the U.S. next month could hurt revenues by $1.0 billion to $1.2 billion and adjusted earnings per share by 65 cents to 80 cents in 2017.
Note that 2016 was a transition period for Teva with headwinds existing in the form of fewer large generic opportunities, generic competition for Copaxone as well as new competition for branded products, and a higher cost base. In Aug 2016, Teva acquired Allergan plc’s generics business, Actavis Generics, for $40.5 billion. The company is working on the integration of Actavis Generics, and expects to generate cost synergies and tax savings of approximately $1.4 billion by the end of 2019.
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Teva Falls on Disappointing 2017 Sales & Earnings Guidance
Teva Pharmaceutical Industries Ltd. (TEVA - Free Report) provided a weaker-than-expected sales and earnings guidance for 2017 seeing that its blockbuster multiple sclerosis drug, Copaxone, is reeling under competitive pressures.
Following the announcement, shares of the Israeli generic pharmaceuticals company declined almost 8% on Friday.
Teva’s shares have tanked 44.7% in 2016, underperforming a decline of 35.9% for the Zacks-classified Generic Drugs industry.
In 2017 so far, the company’s shares were down 3.2%, comparing unfavorably to a dip of 0.1% for the industry.
Coming back to the 2017 guidance, Teva expects revenues in the range of $23.8–$24.5 billion and earnings in the band of $4.90–$5.30 per share. Both sales and earnings fell short of the Zacks Consensus Estimate of $25.58 billion and $5.36 per share, respectively. Management cited the shortfall of product launches as the key reason for the subdued guidance.
While the Generics segment is expected to record revenues of $13.9–$14.3 billion, Specialty segment sales (excluding Copaxone) are expected to be between $4.0 billion and $4.2 billion. Copaxone is expected to generate sales of $3.8 billion to $3.9 billion.
Copaxone faces competition from existing MS products such as Avonex, Betaseron, Rebif, Extavia and Tysabri. Competition in the MS market has further intensified with the launch of oral drugs like Biogen’s Tecfidera, Novartis AG’s (NVS - Free Report) Gilenya, and Sanofi’s Aubagio.
Moreover, Teva is facing patent challenges for the 40 mg thrice-weekly formulation of Copaxone. However, the company mentioned that the 40 mg formulation is not expected to face generic competition in the U.S. this year. The 20 mg formulation of Copaxone, however, continues to face generic competition. In Jun 2015, Novartis’ generic arm – Sandoz, along with its partner Momenta Pharmaceuticals, Inc. , launched Glatopa, a once-daily generic version of 20 mg formulation of Copaxone.
In the latest press release, Teva mentioned that the entry of two generic competitors to Copaxone in the U.S. next month could hurt revenues by $1.0 billion to $1.2 billion and adjusted earnings per share by 65 cents to 80 cents in 2017.
Note that 2016 was a transition period for Teva with headwinds existing in the form of fewer large generic opportunities, generic competition for Copaxone as well as new competition for branded products, and a higher cost base. In Aug 2016, Teva acquired Allergan plc’s generics business, Actavis Generics, for $40.5 billion. The company is working on the integration of Actavis Generics, and expects to generate cost synergies and tax savings of approximately $1.4 billion by the end of 2019.
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