Teva Shares Hit 15-year Low, Mylan Surges After FDA Bombshell

News of FDA approving generic version of Teva's top-selling drug, Copaxone, hit Tel Aviv as stock market reopens after holiday

A Teva Pharmaceutical Industries Ltd. logo at the entrance to the company's factory in Godollo, Hungary.
Bloomberg

Teva Pharmaceuticals stocks plummeted 14% on Sunday morning at the Tel Aviv Stock Exchange, hitting a 15-year low after the U.S. Food and Drug Administration last week approved a generic version of its flagship branded drug.

Also last week, European regulators gave the go-ahead for a generic version made by Alvogen.

Mylan's shares were surging 19.5% on the news of the FDA approving a generic version of Copaxone, a multiple sclerosis drug by Teva, generating more than $4 billion in revenue for the Israeli drug maker last year.

The new generic competition comes as Teva struggles with huge debts, price pressure on its core generic drug business in the United States and a leadership vacuum.

The impact of the two generic Copaxone launches to Teva's fourth-quarter earnings could be a reduction of at least 25 cents a share, or about $250 million, according to an early assessemnt by the company.

The first blow to Teva came when the FDA approved Mylan’s applications for both 20- and 40-milligram versions of generic Copaxone. The 40-milligram dosage accounted for more than 85% of Copaxone prescriptions in the second quarter.

The FDA clearance came earlier than either Teva or Mylan had expected and just a day after the agency had said it would introduce measures to speed up approval of generic versions of complex drugs like Copaxone to help address the rising cost of pharmaceuticals.

JPMorgan analysts said Teva now faced full generic competition for Copaxone nine to 12 months earlier than expected. Teva had already been hurting due to weak generics prices in the United States and high debt.

Analysts called the approval a big win for Mylan and said it would help 2017 and 2018 earnings. Mylan filed its first application for a version of Copaxone in 2009.

After the approval, Mylan said it expected to start shipping its generic drug very soon. The FDA approval letter also said the company might be eligible for 180 days exclusivity on the drug, Mylan said.

Momenta Pharmaceuticals and the Sandoz unit of Novartis already sell a generic version of 20-milligram Copaxone and are developing a version of the 40-milligram dosage.

But their difficulties in getting the higher-dose version approved had dampened expectations for Mylan before Tuesday. Momenta said the companies would still be able to launch during any exclusivity period if they received approval.