Shares in Teva Pharmaceutical Industries have been weak recently but the world’s largest generics firm’s competitive advantages should ensure strong growth going forward.
That is the key message from a research note issued by analysts at Edward Jones. It notes that in the USA, the Israeli drugmaker fills about 22% of all generic prescriptions and has the most filings with the US food and Drug Administration for new copycat drugs (approximately 80, representing around $50 billion in branded sales over the past 12 months) where it is believed to be the first-to-file.
Outside the USA, the broker believes that Teva is in pole position to benefit from opportunities in Italy, Spain, France and Japan (“countries with very low generic dispensing rates”), as well as Germany, which is opening its generic market to price competition. The Petach Tikva-based company is also well-paced to grow in China, Russia, India and Latin America.
Edwards Jones notes that Teva’s share price is sensitive to any news about Copaxone (glatiramer acetate), the world’s leading multiple sclerosis drug by market share but which loses patent protection in May 2014. The analysts note that “there are two groups of generic companies challenging Teva’s patents on the drug [but] we believe these challengers face a difficult battle”.
The analysts note that most biotech drugs have no generic competition upon patent expiration, and upwards of $40 billion of branded biotech drugs are expected to lose patent protection in the USA over the next decade. Teva is well placed to benefit here, they say, as it has four biotech manufacturing facilities and makes several biologics overseas.
They conclude that the share price falls are “an overreaction and ignores the fact that Teva is well-positioned to benefit from over $80 billion in branded sales going generic over the next five years”.
