Teva Pharmaceutical Industries Ltd. (TEVA), the world’s largest maker of generic drugs, advanced the most in three weeks on prospects the drugmaker will begin selling its generic diabetes pill in the U.S.
Shares of the Petach Tikva, Israel-based company gained 2.2 percent, the most since May 16, to 142.2 shekels, or $39.41, at the close in Tel Aviv, narrowing the gap with its more actively traded American depositary receipts. Teva rose 3.4 percent last week in New York to $39.49 compared with a drop of 1.7 percent in Israel.
Teva stands to benefit after a U.S. Food and Drug Administration advisory panel said June 6 that the perceived heart risks of GlaxoSmithKline Plc (GSK)’s best-selling diabetes pill, Avandia, may have been overstated and restrictions should be eased, according to Timothy Chiang, an analyst at CRT Capital Group LLC in Stamford, Connecticut who rates Teva buy. The FDA approved a generic version from Teva in January. Sales of the former $3 billion-a-year drug fell to $9.5 million last year after London-based Glaxo’s patent expired in 2011.
“Teva could benefit from it and generate even more revenue,” Chiang said in a telephone interview. “They are the biggest maker of generic drugs in the world and yet their valuations do not fully reflect all that.”
While Teva will post the smallest increase in annual sales in its history, revenue (TEVA:US) will rise to a record $20.4 billion in 2013, according to the average of 17 analysts surveyed by Bloomberg. The shares currently trade 7.6 times estimated earnings, or 27 percent below the five-year average, data compiled by Bloomberg show.
Teva’s New York premium to Tel Aviv was the widest among dually listed shares before the Israeli market opened today.
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