Teva Pharmaceutical Industries turned in second-quarter profits that were right on the mark as far as the analysts were concerned and affirmed its forecast for sales and profit for the year.
The world's biggest maker of generic drugs said its non-GAAP net profit reached $1.1 billion in the three months, or $1.28 a share, up 16% from the same time in 2011. Revenue climbed 19% to $5 billion. The company has been forecast to earn $1.28 a share, according to analysts polled by Thomson Reuters I/B/E/S, but they had predicted that revenue would be a slightly higher $5.08 billion.
Revenue was hurt by the weakness of the euro, the ruble and other continental currencies, as well as by falling prices and growing competition. European sales were unchanged at $1.5 billion, though generic sales fell 12% to $884 million because of the decline in the value of European currencies. In local currency terms, sales were down a more modest 1%, Teva said.
Against that, Teva's generic drug sales in the United States grew 16% to $1.1 billion, thanks to the launch of two products with six months exclusivity under regulatory rules.
The company reaffirmed its full-year outlook from May, which sees revenue of $20-$21 billion and EPS excluding one-off items of $5.30-$5.40. "This was a significant quarter for Teva as we remain on track to reach our financial goals for the year," said Jeremy Levin, who took over in May as the company's president and CEO, adding that the third quarter would be weaker than the second.
"The U.S. generics business continued to recover with a positive trend, our global branded division experienced strong growth, and our European generics business, while down from last year's second-quarter results due to macroeconomic conditions, showed solid sequential growth from the first quarter," Levin said. He added that Teva will present its highly anticipated strategic plan for 2013 to investors in New York on December 11.
Teva shares fell 1.6% in Tel Aviv to NIS 160.90 yesterday. They were down 3.3% to $39.53 in New York by mid-afternoon New York time. Goldman Sachs analyst Jami Rubin said Teva's results were mostly in line with expectations but "low quality," as revenue was slightly softer than expected, as were gross margins. The company is looking to build sales outside of Western Europe and the United States. In the second quarter, sales of generic drugs outside those two key markets jumped 36% to $676 million thanks to the purchase of the Japanese company Taiyo as well as strong sales in Eastern Europe and Latin America.
Teva continued to be hurt by slowing sales of its top-selling branded drug, the multiple sclerosis treatment Copaxone in the United States. Sales of the drug increased 3% in the second quarter to $701 million, even though its price was raised 15% at the start of the year. However, Copaxone sales outside the United States grew 44% to $281 million with strong sales in Russia. Teva is gradually taking over full marketing rights - and profits - for Copaxone sales, which also helped boost revenue from the drug.
During the quarter, there were favorable U.S. and UK court rulings which should ensure protection of Copaxone from generic competition until September 2015, Teva said.
In addition, Teva had positive results from an advanced trial for a more convenient three-times-a-week dosing regimen of Copaxone. The company expects to submit results to the U.S. Food and Drug Administration in first quarter 2013.
Teva took a blow from the expiry of its sleep disorders drug Provigil, which it acquired when it bought the U.S. company Cephalon last October for $6.5 billion. Sales of Provigil fell to just $48 million in the second quarter from $251 million the same time in 2011.
Reuters contributed to the report.
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