Teva Pharmaceutical Industries, the world's biggest generic drugmaker, reported a jump in fourth quarter profits on Wednesday, but analysts agree that it has to diversify its sources of income and reduce its dependence on certain products and markets.

A major contributor to profit, Teva's own multiple sclerosis drug Copaxone, faces generic and brand competition, for one thing. As Teva has only two brand drugs, it has sought to solve this problem through acquisitions of companies.

Fourth-quarter sales rose 28% to $5.7 billion, Teva said on Wednesday.

Global sales of Copaxone grew 8% to $1 billion in the quarter, partly thanks to Teva jacking up its price. Analysts suspect sales of the drug will peak this year.

Fourth-quarter earnings excluding one-off items rose to $1.59 per diluted share, compared with $1.25 a share in the same period in 2010, and slightly above expectations.

Teva, which closed its $6.5 billion purchase of U.S. specialty drugmaker
Cephalon in October, was forecast to earn $1.58 per share ex-items on
revenue of $5.63 billion, according to Thomson Reuters I/B/E/S.

Teva president and CEO Shlomo Yanai said the company ended 2011 on a strong note.

"Teva's strategy is focused on growth and on reducing dependence on any one particular market or product," Yanai said, pointing to the acquisition in 2011 of Cephalon, Japan's Taiyo and a joint venture with Procter & Gamble. "Our strategic achievements in 2011 provide a strong foundation for Teva's  sustainable long term growth."

Teva said it raised its quarterly dividend by 25% to 1 shekel a share.

Sabina Podval, pharma analyst at Leader Capital Markets, shrugged that Teva’s fourth-quarter report was as expected. Teva had lowered investor’s expectations during the year and the trend observable at the company during 2011 continued in the fourth quarter, she wrote. “The report met theconsensus and was slightly above my forecast.”

Teva managed to claw back somewhat from eroding U.S. sales of generic drugs during the fourth quarter, Podval wrote. Yet for the year 2011, U.S. sales of generic drugs were down 32% compared with the year before. Teva's problem in the U.S. is competition, Podval explains.

On the other hand, generic drug sales in Europe rose 33% for the yearcompared with 2010. The debt crisis in Europe plays in Teva's favor to a degree, as cash-strapped governments seek ways to lower health care costs.One way is to replace brand drugs with cheaper generic versions, Podval explains.

Another area where Teva is making strides is over-the-counter drugs, afairly new area for it. Fourth-quarter sales of OTC drugs sprang to $217 million, from a pace of $180-185 million in the preceding quarters. Tevaaspires to reach OTC sales of a billion dollars in 2012, Podval says.

At the start of the year Teva chief executive Shlomo Yanai announced his resignation after five years on the job. The new CEO, Jeremy Levin, brings a successful strategy of making mid-sized deals from his previous employersBristol-Myers Squibb.

The South African-born, Cambridge-educated Levin, global head of businessdevelopment and strategic alliances at Novartis from 2003 to 2007, has sfar declined to give any specifics on his strategy for Israel-based Teva, citing the need to complete a "deep dive" in the next few months.

Another area where Teva is making strides is over-the-counter drugs, afairly new area for it. Fourth-quarter sales of OTC drugs sprang to $217 million, from a pace of $180-185 million in the preceding quarters. Tevaaspires to reach OTC sales of a billion dollars in 2012, Podval says\At the start of the year Teva chief executive Shlomo Yanai announced his resignation after five years on the job. The new CEO, Jeremy Levin, brings a successful strategy of making mid-sized deals from his previous employers Bristol-Myers Squibb.

The South African-born, Cambridge-educated Levin, global head of businessdevelopment and strategic alliances at Novartis from 2003 to 2007, has sofar declined to give any specifics on his strategy for Israel-based Teva, citing the need to complete a "deep dive" in the next few months.

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