Teva shares plunge after drugmaker misses revenue forecasts
Company lifts guidance for the year but still seeks new drivers of growth
Teva Pharmaceutical Industries is the world’s biggest generic drugmaker. Photograph: Ronen Zvulun/Reuters
Teva Pharmaceutical Industries plunged in early trading after the drugmaker missed analysts’ estimates for revenue amid falling US sales and price erosion for generic drugs, its biggest business.
Second-quarter sales fell 18 per cent to $4.7 billion, the Israel-based company said in a statement on Thursday, narrowly missing analysts’ average estimate of $4.73 billion. The shares fell as much as 9 per cent before US markets opened even though the company lifted its profit guidance for the year.
Sales of generic drugs fell by almost a third to $947 million in North America, Teva’s largest market. The combination of rapid FDA approvals for copycat medicines as well as consolidation of big buyers has squeezed profitability for more than one year.
After chief executive Kare Schultz took the reins in November, Teva warned in February that it wouldn’t be able to charge as much as expected for its products, and that 2018 sales might decline as much as 18 per cent from a year earlier. His moves to cut costs by $3 billion by 2019 while shedding workers and factories have buoyed the shares, which have doubled since November 2nd.
Though the company has raised its outlook twice since February, the latest report showed that Teva’s still looking for new drivers of growth as the top-selling multiple sclerosis drug, Copaxone, fades.
The drug giant took on massive loans in 2016 to bolster its generic drug division, just as the bottom fell out from under the industry, and now it’s stuck paying down a gargantuan debt pile. The drugmaker owes $30.2 billion to its creditors, down from $30.8 billion at the end of March.
Profit excluding some costs fell to 78 cents in the quarter, compared with $1.02 a share a year earlier, Teva said. Analysts surveyed by Bloomberg expected 64 cents. Earnings excluding some items for the year will be between $2.55 a share to $2.80 share, the company said in a statement. It had earlier forecast a range of $2.40 a share to $2.65 a share.
Sales of Copaxone fell nearly 40 per cent for the second quarter to $626 million, besting analysts’ projection of $495 million. The drug is likely to face further losses after Mylan NV, one of Teva’s biggest rivals, cut the price of its generic copy by 61 percent at the end of the last quarter. – Bloomberg