Teva Pharmaceutical Industries has posted a reasonable set of financials for the second quarter, boosted by sales of its multiple sclerosis drug Copaxone, though observers, while worried by a decline in US sales, are expecting a strong second half of the year.
Net income fell 28% to $576 million, hurt by legal charges of $221 million primarily in connection with settlements of at-risk launches of generic versions of Novartis’ blood-pressure-lowering treatment Lotrel (almodipine/benazepril) and Pfizer's epilepsy treatment Neurontin (gabapentin).
Sales increased 11% to $4.21 billion, but turnover fell 15% in North America to $2.10 billion, and particularly sank in the USA (-40% to $903 million). The Israeli drugmaker noted that the latter decline is due to the fact that in contrast to last year, the current quarter "lacked significant new launches and sales of key products", such as generic equivalents of Boehringer Ingelheim's Mirapex (pramipexole) for Parkinson’s disease, Sanofi’s colorectal cancer drug Eloxatin (oxaliplatin) and Pfizer/Nycomed’s gastrointestinal drug Protonix (pantoprazole).
In Europe, sales hit $1.48 billion, representing a leap of 82% and attributable to an increase in generic sales in Germany, France, Spain and Italy. Ratiopharm, bought last year for 3.63 billion euros, drove growth in the Old Continent.
Record Copaxone sales
The Israeli company’s branded business was again dominated by Copaxone (glatiramer acetate). The treatment brought in record sales of $957 million, an increase of 24% (and up 29% in the USA to $682 million).
Sales of Azilect (rasagiline) for Parkinson’s disease reached $97 million, up 38%, while global respiratory revenues were up 9% at $240 million. Teva's women's health business had turnover of $119 million, up 45%, while Active pharmaceutical ingredient sales to third parties totalled $183 million, a rise of 12%.
Chief executive Shlomo Yanai said "contributions from across our company enabled us to offset the challenges we faced in our US generics business". However he added that the firm anticipates increased growth for the latter, "as well as continued growth across all our geographies and businesses, in the second half of the year".
Judson Clark, an analyst at Edward Jones, told PharmaTimes World News that Teva has, "from the beginning, guided for a back-end-loaded 2011, and we're seeing that play out" but "the degree to which the second half needs to be better than the first has, I believe, spooked investors".
Not only Teva hit by slowdown in USA
He noted that sales of generics in the USA continues to be weak, "but we're not terribly surprised by this having heard a similar story from another participant in the US pharmaceutical chain that utilisation is down domestically". Mr Clark added that generics continue to be strong in Europe, "where we estimate margins are stronger than in the USA, reflecting positively on the company's acquisition of Ratiopharm and their European strategy broadly".
While Teva is moving to diversify its business mix, Copaxone "is still consistently meeting or exceeding expectations", he said, although "we do expect competition in the space to be fierce". Mr Clark concluded by saying that "we continue to think that Teva is still very well-positioned to benefit from the wave of branded drugs going generic over the coming years".