Shares in Israeli drugmaker Teva Pharmaceutical Industries dropped on both sides of the Atlantic yesterday, falling 10% on the Nasdaq and almost 9% in Tel Aviv, as investors shrank back on news of first-quarter results detailing a loss of $1 billion, or $1.40 a share.
The primary driver for the period’s loss, which compares to earnings of $259.1 million, or $0.31 a share, a year ago, were charges relating to the group’s recent purchase of Ivax, the financial results of which were included for the first time in the quarter. But Ivax’ performance was disappointing, its business generating sales of just $329 million. And this has prompted questions about whether the $7.4 billion Teva – the world’s largest maker of copycat drugs – splashed out for Ivax was too high.
But even excluding Ivax the company’s performance was considered relatively weak, with net income of $286 million. Sales came in at $1.67 billion, up 28% over the year-ago quarter. Currency exchange effects wiped around $39 million off revenues and, overall, turnover of Teva’s generic offerings stayed level with the year-earlier period, after a lack of new drug launches and price cuts.
On the plus side, Teva’s multiple sclerosis drug Copaxone, one of two drugs it has developed in house, performed particularly well, pulling in revenues of $329 million, up 29%. It is now the top-selling MS therapy in the US, according to the group.
But it looks as the firm may be on a rocky course over the next year. Teva’s Chief Executive Officer Israel Makov said the company is expecting to generate earnings per share of $1.82 to $1.90 on sales of $8.2-$8.5 billion for the full year, falling below general expectations.
This forecast, however, does not include the possibility, considered likely by industry observers, that Teva will be awarded six months’ marketing exclusivity for a copycat generic version of Merck’s multi-billion dollar cholesterol-buster Zocor (simvastatin), which could give a significant boost to sales. The US patent on Zocor is due to expire on June 23, opening up a $3.14 billion market to generic rivals and, for Teva, the exclusivity could add $0.30 a share to its 2006 earnings, according to analysts at Goldman Sachs.
