Just a week after its CEO stepped down following a series of severe business missteps, Teva Pharmaceuticals on Tuesday offered investors some rare good news with better fourth-quarter profits for 2016 than analysts had been expecting.
- Israel Police investigate Teva on suspicion it bribed officials abroad
- The dubious missteps that muddled Teva CEO's promising start
- Teva to distribute medical marijuana inhaler throughout Israel in 2017
To the market’s relief, the company, Israel’s biggest, also affirmed its projections for sales and earnings, even though acting CEO Yitzhak Peterburg estimated that the impact from new generic competition to its best-selling Copaxone drug would be somewhat more serious than previously forecast.
If there was anything to mar a good day for Teva, it was a report that the earnings figures had been leaked before their official release, which caused the drug maker’s New York-listed shares to climb 4.5% in pre-market trading.
At mid-afternoon in Tel Aviv, Teva shares were up 4/2% at 124.40 shekels ($33.15).
Teva earned $1.5 billion, or $1.38 a share, excluding one-time items in Q4, up from $1.28 the previous year. Revenue grew 33% to $6.5 billion, primarily due to $630 million in sales from Actavis, the generic-drug maker the company bought last year for $40.5 billion.
Teva had been forecast to earn $1.35 excluding one-off items on revenue of $6.24 billion, according to Thomson Reuters I/B/E/S.
Teva affirmed its 2017 forecast of earnings of between $4.90 and $5.30 a share on revenue of between $23.8 billion and $24.5 billion. In 2016 it earned $5.14 a share, on an adjusted basis, on revenue of $21.9 billion.
Peterburg, who was appointed acting CEO until a permanent replacement is found for Erez Wigodman, who stepped down last week, said he would not be waiting for a new CEO before taking steps to address the pharma giant’s multiple problems.
“With the entire Teva team, I am conducting a thorough review of the business to find additional opportunities to enhance value,” he said, without giving details.
Teva, the world’s biggest maker of generic drugs, has been through a turbulent period over the last two years, capped by Vigodman’s decision to leave.
Among other things, in recent months Teva reached settlements with the U.S. involving payment of hundreds of millions of dollars in penalties, and claimed it was defrauded in its $2.3-billion acquisition of the Mexican drug maker Rimsa. As a result it took a $900-million write-down on Rimsa.
The costs involved left the company with a loss of $1 billion, or $1.10 a share, based on standard U.S. accounting rules.
Vigodman left the company adrift as it faces major challenges, including coping with an increasingly competitive generic-drug market, with the debt it took on to buy Activis, and with a U.S. court ruling earlier this month invalidating four patents covering the 40-mg. flagship version of Copaxone.
Global sales of Copaxone, the multiple sclerosis treatment that accounts for an outsized proportion of Teva’s sales and profits, rose 6% in the quarter to $1 billion – but that was before the patents were ruled invalid.
On Monday, Peterburg told analysts that the company now expects that the loss of Copaxone’s patent protection and the launch of generic competition would deprive Teva of $1 billion to $1.3 billion of revenue this year, a slight increase from the range of $1 billion to $1.2 billion the company predicted in January.
The hit to earnings will amount to 75 to 95 cents a shares, bigger than the 65-80-cent range the company projected in January, he said.
Teva’s main focus will be extracting synergies from the Actavis deal, implementing efficiency measures, generating cash and paying down debt, Peterburg added.
“While we continue to manage through a turbulent and constantly evolving industry, we are committed to execute against our strategy with more diversified revenue sources and profit streams,” the acting CEO said.