Teva ( $TEVA ) Stock Dips Despite Q1 Earnings & Sa

Teva ( $TEVA ) Stock Dips Despite Q1 Earnings & Sales Beat

https://finance.yahoo.com/news/teva-teva-stoc...12962.html

Teva Pharmaceutical Industries Limited TEVA reported first-quarter 2018 earnings of 94 cents per share, which beat the Zacks Consensus Estimate of 68 cents per share. However, earnings per share declined 11.3% year over year.

Revenues came in at $5.1 billion, which also beat the consensus estimate of $4.8 billion. However, sales declined 10% year over year (down 15% excluding impact of currency).

Sales were hurt by increased pricing erosion in the U.S. generics market and rapid erosion in sales of Teva’s key multiple sclerosis injection, Copaxone and divesture of some non-core assets.

Segment Discussion

As announced in November last year, Teva no longer reports two separate global groups for its two businesses – generics and specialty medicines. Instead, it reports under new segments based on three regions — North America, Europe and Growth Markets.

North America segment sales were $2.5 billion, down 22% year over year due to pricing erosion in U.S. generics market, lower sales of Copaxone and divestiture of some non-core assets in the Women’s Health business. In the United States, revenues declined 23% to $2.4 billion.

Lead branded product, Copaxone, posted sales of $476 million in North America, down 40% year over year due to generic competition for the 20 mg as well as the 40 mg formulation.

Glatopa, a generic version of Copaxone 20 mg, is being marketed by Momenta and Sandoz - Novartis’ NVS generic arm - since 2015 while Mylan MYL launched its version of the 20 mg formulation in October 2017. In the same month, in a major blow to Teva, Mylan launched (at-risk) its generic version of the 40 mg thrice-weekly formulation, much earlier than expected.

With the entry of the generic version of the 40 mg formulation and the entry of a second generic version of the 20 mg formulation, there has been rapid erosion in sales of Copaxone. Moreover, a second generic version of the 40 mg formulation (Glatopa) was launched by Sandoz in February this year, much earlier than its scheduled launch in April.

On the call, Teva said that despite Mylan's introduction of a 40 mg generic, Copaxone still commands around 85% of volumes in the 40 mg market. However, Teva had to decrease the price of Copaxone by increasing rebates in connection with the generic competition. The lower pricing helped it maintain its volume share. However, Teva expects tougher competition as the year progresses, which could exert some further pressure on pricing.

Sales of other branded products Bendeka, Treanda, ProAir and Qvar increased in the quarter.

The newest product in Teva’s branded portfolio, Austedo, recorded sales of $30 million in North America.

Austedo (SD-809) was approved and launched in April 2017 for the treatment of chorea associated with Huntington’s disease and for the second indication, tardive dyskinesia, in the United States in August.

Generic products revenues declined 23% to $1.1 billion in the quarter due to lower volumes and price erosion. Significant competitive and pricing pressure is hurting the U.S. generics industry. The consolidation of customers in the industry has increased the ability to negotiate lower prices for generic drugs. Teva launched 10 generic products in the first quarter

Distribution revenues, which are generated by Anda, rose 12% in the quarter to $331 million.

In August 2016, Teva acquired Allergan’s AGN generics business – Actavis Generics – and Allergan’s Anda Inc., the fourth largest distributor of generic pharmaceuticals, in October 2016.

The Europe segment recorded revenues of $1.44 billion, up 8% year over year. However, in constant currency terms, sales declined 6% due to loss of revenues from the closure of a distribution business in Hungary and divestiture of the women’s health business.

Generic products (including OTC products) revenues in Europe rose 2% on a constant currency basis to $997 million due to new product launches and volume growth in OTC, partially offset by price decline. Copaxone sales declined 13% on a constant currency basis to $153 million due to price reductions following the entry of generics.

In the Growth Markets, sales rose 4%. However, in constant currency terms, sales were flat in this segment as higher sales in Israel, Japan and Russia were partially offset by the effect of the deconsolidation of subsidiaries in Venezuela and loss of revenues from the sale of the women’s health business in these countries. While Generic products (including OTC) revenues declined 3% in constant currency terms to $488 million, Copaxone sales declined 24% to $16 million.