Shares of Teva Pharmaceuticals dropped 8% on the opening of trade on Wall Street on Monday after an analyst at the Morgan Stanley investment bank lowered his price target, the price that the stock should sell for down the line, from $16 to $6.
As of midmorning in New York, shares of Teva, Israel’s largest pharmaceutical company and the world’s biggest generics firm, were trading down 8.8% on the Nasdaq exchange at $8.44. The stock closed in Tel Aviv on Monday at 30.05 shekels ($8.44), off 8.6% on the day.
Morgan Stanley’s new price target represents a 35% drop from Teva’s closing price in New York on Friday. Morgan Stanley analyst David Risinger attributed the downgrade of Teva shares to expectations that the price of generic drugs in the United States would continue to decline in the near future, in part under price pressure from medical insurance drug buying groups.
This runs contrary to prior expectations that generic prices would stabilize. Price pressure in the generics market is also expected to come from smaller foreign generics manufacturers entering the U.S. market.
Focusing in a note to clients on the shares of four generic drug manufacturers, including Teva and Endo International, Risinger expressed concern in part over Teva’s exposure to opioid litigation in the United States. “While all four generic stocks are exposed to opioid litigation, Teva and [Endo International] appear to face more significant risk given their historical branded opioid exposure,” Risinger said, according to The Street website.
Last month an Oklahoma judge approved a revised $85 million settlement with Teva Pharmaceuticals resolving claims by the state’s attorney general that the drugmaker helped fuel the U.S. opioid epidemic.
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The case is one of around 2,000 by state and local governments seeking to hold drugmakers responsible for an epidemic the U.S. Centers for Disease Control and Prevention says led to a record 47,600 opioid-related overdose deaths in 2017. The Oklahoma case is being closely watched by plaintiffs in other opioid lawsuits, particularly in 1,900 cases pending before a federal judge in Ohio who has been pushing for a settlement ahead of an October trial.
Reuters contributed to this report.