Teva Posts Strong Results After Stormy Fourth Quarter

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Teva Pharmaceuticals, the world’s largest generic drug maker, earned $1.42 a share excluding one-time items in the fourth quarter of 2013, up 10 cents from a year earlier, lifted by higher prices for its Copaxone multiple sclerosis treatment and other specialty drugs

Teva said its revenue rose 3% to $5.43 billion. Aggregate net income was ahead 6% from a year earlier to $1.2 billion, it said.

“During 2013 we had several key product launches, driven by a strong pipeline, which will continue to bear notable results in 2014,” said Eyal Desheh, who is acting as the company’s CEO until Erez Vigodman takes over next week.

The results were ahead of forecasts by analysts surveyed by Reuters, who expected the company to post a profit of $1.40 a share excluding one-time items on revenue of $5.19 billion, according to Thomson Reuters. Teva’s share price rallied on the news, rising as much as 27% in Tel Aviv Stock Exchange trading to 161 shekels ($45.50).

The company’s strong fourth-quarter earnings came in sharp contrast to the upheavals Teva was suffering during the last months of 2013. The company was under fire from Israeli politicians for its plans to lay off hundreds of local employees as part of a global cost-cutting program, and its CEO, Jeremy Levin, was forced to step down at the end of October in an acrimonious and very public dispute with the board over strategy.

Since then the company has been shadowed by doubts about the effectiveness of its board and its failure to come up with solutions to its reliance on Copaxone, which may face generic rivals for the first time perhaps as soon last this spring.

Vigodman, who was lured from the agrochemicals maker Adama (formerly Makhteshim Agan) because of his track record in turning around a troubled company, must implement cost cuts and reduce Teva’s reliance on Copaxone and its low-margin generics business. Profits from generic drugs are waning as competition grows and business opportunities dwindle.

Global sales of its best-selling drug Copaxone, which account for about 20% of sales and 50% of profit, rose 8% to $1.14 billion in the quarter from the same period in 2012. The injectable drug faces competition from oral treatments and cheaper generics in the coming years.

Last week Teva received U.S. regulatory approval for its three-times-a-week Copaxone, which it hopes will strengthen its position ahead of the competition. It plans to convert 57% of multiple sclerosis patients to the 40 mg dose administered three times a week from a current daily dose of 20 mg by year end.

By contrast, Teva’s generic drug sales edged up just 1% to $2.7 billion in the fourth quarter from a year earlier. Generic profits were down $5 million to $482 million, while profits from specialty drugs, led by Copaxone, grew 8% to 1.65 billion.

Teva, Israel’s biggest company, reaffirmed its outlook for 2014 offered in December, when it forecast earnings per share of $4.20 to $4.50 on revenue of $19.3 billion to $20.3 billion if rivals are allowed to launch cheaper versions of Copaxone. Without competition it sees EPS of $4.80 to $5.10 on revenue of $19.8 billion to $20.8 billion.

Teva’s U.S. generic sales rose 14% in the quarter to $1.2 billion due to several product launches in the third and fourth quarters of 2013. European generic sales fell 2% to $940 million due to a contraction of the market in France, partly offset by higher revenue in Britain and Italy.

Teva declared a quarterly dividend of 1.21 shekels a share, up from 1.15 shekels in third quarter.

Teva's new CEO Erez Vigodman will next week take over a company with an uncertain future.Credit: Eyal Toueg