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FDA Approves Teva's Generic

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Teva Pharmaceutical Industries Ltd. (TEVA - Free Report) recently announced that it has gained US Food and Drug Administration (FDA) approval for its generic version of Shire’s (SHPG - Free Report) Adderall XR capsules (5mg, 10mg, 15mg, 20mg, 25mg and 30 mg).

According to IMS, Adderall XR, which is approved for the treatment of attention deficit hyperactivity disorder, delivered annual sales (both branded and generic) of about $2 billion in the US as of Dec 31, 2012.

Teva already sells a generic version of Adderall XR under a 2006 license and distribution agreement with Shire. Per the terms of the agreement, Shire has to supply product to Teva through Apr 1, 2014.

With the FDA granting final approval, Teva can now remain in the Adderall XR market even after the expiry of its supply agreement with Shire.

Teva currently carries a Zacks Rank #3 (Hold). The company, which is going through a transition period, provided disappointing guidance for 2013. However, with the company not including the impact of its cost-savings plan in its guidance, we believe Teva is leaving some room for delivering above expectations. Share buybacks also leave some room for upside.

We expect investor focus to remain on the execution of the company’s new strategy. Earlier this year, Teva sold off its animal health business in the US to Bayer (BAYRY - Free Report) . This will allow the company to focus on developing, manufacturing and marketing branded and generic drugs globally -- Teva’s primary areas of strength.

Among generic companies, Mylan (MYL - Free Report) currently looks better-positioned with a Zacks Rank #2 (Buy). Shire also carries a Zacks Rank #2.

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