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7/3/2008 1:00 PM

Teva Pharmaceutical Industries Ltd (ADR) (TEVA)

CAPS Rating:
*****

A global pharmaceutical company, which develops, produces and markets generic drugs covering all major treatment categories.

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Avatar NetscribePhrmtcl (91.40) Submitted: 12/12/06 8:54 AM : Outperform Start Price: $31.46 TEVA Score: 60.88

Israel-based Teva Pharmaceutical Industries Ltd. is a leading manufacturer of generic drugs. Through its U.S. subsidiary, Teva Pharmaceuticals USA, the company makes generic versions of brand-name antibiotics, heart drugs, heartburn medications, and more.

In 2006, the company completed the acquisition of its fellow generic manufacturer Ivax Corporation. The combined companies generated revenue of $7 billion for the twelve months ending September 30, 2005, thereby helping Teva increase its presence in over 60 countries across the world.

FDA has granted tentative approval for the company's Abbreviated New Drug Application to market its generic version of Johnson and Johnson’s Risperdal. Risperdal generated sales of $43 billion in 2005 for Johnson and Johnson and is expected to go off-patent in December 2007. The company would be able to launch the drug after the final approval by the FDA upon patent expiration.

Recently, FDA has decided to expedite the approval process of new drug application for drugs of greater importance to public health, drugs that are short in supply, and drugs that do not have a generic form in the market already. Additionally, applications will be reviewed in six months as against 16 months previously; this will benefit a generic drug manufacturer like Teva enormously.

Considering that drugs worth $19 billion and $10 billion are expected to go off-patent in 2006 and 2007, respectively, the industry outlook seems to be extremely positive. Moreover, continued strong performances of key drugs like Oxycontin, Azilect, and Coxapone in addition to the acquisition of Ivax will drive the company in 2007.

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Avatar NetscribePhrmtcl (91.40) Submitted: 4/16/07 3:05 AM

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The five year period ending 2006, Teva's revenue compound annual growth rate (CAGR) was 32%, operating earnings per ADR was 34%, and operating cash flow was 50%. The company gracefully stepped into fiscal 2007 after posting a massive 60.1% increase in sales in 2006 over 2005.

In Feb 2007, the US FDA granted final approval for the company's Abbreviated New Drug Application (ANDA) for Rabeprazole Sodium Delayed-Release Tablets, 20 mg and generic Focalin tablets. Teva has been awarded a 180-day period of marketing exclusivity. In addition to the sturdy ProAir trends, Wellbutrin XL 300mg performance, and anticipated steep acceleration in generic Oxycontin sales which should occur in mid 2007, Teva may be in a position to launch generic Lotrel some time in 2007, which would boost up its top line.

In Mar 2007, the US FDA granted approval for its ANDA for Cabergoline Tablets. Fiscal 2007-08 appears to be fairly interesting given there are three potential high profile US generic exclusive opportunities viz., Lamictal, Fosamax and Wellbutrin XL 150mg. These three products alone could add more than $800 million in the US generic revenue.

Teva has a dominant US generic position and a branded business that includes Copaxone, indicated for the reduction of the frequency of relapsing-remitting multiple sclerosis (RRMS), with market leadership in the UK, France, Russia, the Czech Republic and large positions in the Latin American. Copaxone is expected to retain its market exclusivity until 2012 and global sales are expected to reach up to $2.2bn in 2011.

Based on a product line with inherent strength, Teva appears to be capable of delivering a 2007-2011 EPS CAGR of 16% through organic growth, and accelerate that to at least 20% through international acquisitions. Globally diversified operations, coupled with strong market position provide resilience to the company's operations. Its alliances are strategically important as they provide it with higher value products.

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